Mill owners in Lebanon will start charging for flour in dollars, a move that could lead to bread shortages across the country.
A gathering of Lebanese mill owners issued a statement Tuesday, saying they were unable to gain access through banks to the amount of dollars necessary to operate.
They said Central Bank measures to secure dollars for Lebanese lenders at the official fixed exchange rate of LL1,507, in order to facilitate the import of fuel, medicine and wheat, were not adequate.
“Lebanese banks are not giving us dollars,” the statement read. It added that mill owners owed banks money in dollars and that bakery owners had normally paid mill owners in Lebanese pounds.
The statement added that, owing to a lack of practical provisions that have been made for them, mill owners have been forced into a position where they now have to make decisions for themselves. Given that some customers will not be able to pay in the U.S. currency, this is likely to lead to bread shortages.
The mill owners called on the government to find a solution for the industry, warning that reserves of wheat were decreasing at an alarming rate and would only last for the next month and a half.
Meanwhile, President Michel Aoun called Tuesday on exchange houses not to “harm Lebanon’s financial, economic and touristic reputation” as an apparent lack of U.S. currency has driven up the unofficial price of the dollar.
The comments came after Aoun met with a delegation from the syndicate of currency exchange dealers, headed by Elie Srour.
Rising concerns over a dollar liquidity crunch have fueled fears of a possible devaluation of the Lebanese pound. While the authorized trading band for $1 is LL1,501-1,514, unofficial exchange rates have exceeded LL1,600.
“We are keen on the country’s financial reputation,” Srour said after the meeting. He stressed that U.S. currency was available and “there is no need to panic.”
The difference between official and unofficial exchange rates “is normal as the price of the dollar [at exchange offices] is different than its price in banks,” he added.
A price difference of this magnitude is unprecedented since the establishment of the peg in the late ’90s.
Aoun suggested that exchange houses agree on a document that would commit all who work in the sector to conform to rules and regulations set in coordination with the Central Bank and the Banking Control Commission of Lebanon.
As exchange houses are already regulated by the Central Bank, it was unclear what further measures Aoun had proposed.
The dealers stressed their commitment to following the law when it comes to exchanging dollars and Lebanese pounds.