Archive | Economy

The Only Video You Need To Watch To Understand The Current Crisis

Back in July when the parliament was discussing the budget for the year 2019, not a lot of people probably focused much on the lawmakers’ speeches since most of them actually criticized it, but we were all amused by what MP Salim Saade had to say about falsifying our deficit in order to get the CEDRE funds “They [CEDRE donors] know that we are lying to them, and we know that they know that we are lying to them!”.

However, his joke was in fact a very small part of a thorough explanation for everything that has led to the economic and financial crisis that we are currently going through. Back in July, that economist had a very clear idea of where Lebanon was heading to, while other MPs and ministers were either not listening or making sarcastic comments instead of asking him to elaborate his claims further, they literally seemed uncocerned and it clearly shows in the below video which I highly recommend you watch. It is 24 minutes long and will explain to your the real reasons for the current state we are in now.

If you are interested in following similar experts who say things as they about our situation, then I recommend you check Nassim Taleb and Dan Azzi on twitter. (The latter regularly publishes interesting articles in Annahar and Al-Akhbar newspapers)

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Mobile Operators Now Obliged by Court Order to Price Their Services in Lebanese Lira

Beirut’s Court of First Instance, headed by Judge Zulfa Al-Hassan, issued a temporary decision today obliging Alfa and Touch to issue their bills and price all their services (including recharge cards) for the next three months in Lebanese Lira according to the official dollar exchange rate.

This should basically make subscribers’ lives easier until February 2020, and regulate the price of recharge cards since some dealers were overcharging people by selling the cards at higher exchange rates (1,600 and 1700 instead of 1500). It is a good step indeed, but the best solution in my opinion is to stop linking the prices to US dollars and simply setting the prices in Lebanese Lira to avoid all these conversion problems.

You can check the decision details in the below scans.

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How to Minimize the Effect of the Dollar Crisis on You

For over a month now we have witnessing a dollar shortage in Lebanon which caused two parallel markets to be established for the currency. The first market is the one regulated by the central bank where financial institutions are supposed to deal by the ~1,500L.L rate, while the other is controlled by money changers where the rate changes from day to day and follows the supply and demand principle. And as banks decrease their supply of dollars to the market, their clients feel obliged to turn to money changers who have been imposing a rate as high as 1,750 or 1,800L.L sometimes (20% difference).

This has unfortunately impacted a lot of people since most of us earn our salaries in LBP but pay for goods and services that are priced in USD. And the 20% variation in exchange rate has been translated as an increase in the price of goods. So if I am holding lebanese lira and want to buy a $10 item, it now costs me 18,000L.L instead of 15,000L.L in case a bank refuses my exchange transaction and I opt to do it at some money changer. A real example is now the price of mobile recharge cards which prices have significantly increased in case you want to pay in Lebanese lira.

To avoid this effect of prices inflation on me, I personally have been using digital channels to settle my payments using my credit card (i.e. dealing directly with the financial institutions at the ~1,500L.L rate) whenever I have the option to do so.

This is applicable to mobile recharge cards and bill settlement, internet subscription renewal, money transfers.

Mobile recharge cards & bill settlement

For touch lines you should first create a user on their website and then you can either recharge a prepaid line here or settle your bill here.

Alfa users also need to create an account on Alfa’s website and they can recharge a prepais line here or settle their bills here.

On the other hand, a lot of ATMs around the country gives you the capability of purchasing mobile recharge vouchers when using your card, and you will of course be charged in dollars at the official exchange rate.

Internet subscription renewal

Likewise, the most popular ISPs offer renewing or recharging your internet account online. To my knowledge, Cyberia, IDM, TerraNet, Sodetel, WISE, and MOBI, all offer the service.

Ogero

Ogero actually set their prices in lebanese lira but I’m including it here because I find it more convenient to pay my bill online than physically going to one of their central offices, or to one of their payment partner (like OMT for example) that impose 2,000L.L extra charge for every settled bill.

To settle your bill online, create an account here and then linkt you landline to it by inputting your number and your initial subscription date which you find on any old bill you have.

Money transfers

Last time I tried to transfer dollars outside Lebanon through one of the money transfer companies, the agent didn’t accept the money unless it was in the currency. However, Western Union recently launched a service that allows you to transfer money online using your credit card. I personally didn’t try it yet but you sign up to it here, and you are required to verfiy your identity by taking your ID card to one of the BoB Finance branches in town before starting to use the service.

Other services

Many service providers provide online services that are either not much advertised or people simply don’t know about. If you are subscribed with CableVision for example, you can pay onlin here instead of going through your dealer. And the same applies to beIN here. So always inquire with any solution provider about such possible payment options that can make your life easier.

The above all works as long as bank provide their clients with reasonable amount of dollars to settle their credit cards. So in sum, try as much as you can to perform your exchange operation at regulated institutions until we hopefully make it out of this crisis!

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The Housing Bank Just Screwed Home Shoppers in Lebanon

The two most popular options for home shoppers in Lebanon in order to finance their purchases is to either get a loan from the General Organization for Housing in case the apartment price is relatively low, or from the Housing Bank if the price is on the higher end.

However, earlier this month the Central Bank of Lebanon issued a new circular with amendments on subsidized loans, and as a result the Housing Bank increased its the interest rate from 3% to 3.75% while lowering the payment period from 30 to 20 years and toughening the lending terms in general.

To give you an idea of how these amendments impacted the monthly payments, a loan of $250,000 used to cost ~$1,050 on the previous conditions, but currently cost ~$1,500 based on the new terms and rate (refer to their loan calculator). Needless to say, this 50% increase means that a lot of home shoppers now can no longer afford the apartments they were previously aiming for!

I, for example, have been searching for an apartment in Beirut for a while now and the new terms mean that I have two options, to either settle for a significantly smaller one in space, or simply look for one of the same size outside the city. The latter is unfortunately a deal breaker for me so I just decided to halt everything now in hope for the prices to go down maybe… I guess it is only logical for this to happen now that the demand is expected to take a hit.

Things are by the way also quite ugly now for people who are already engaged by contracts with real estate developers. Those usually pay monthly installments directly to the developers until the project is fully complete, and then apply for a loan to finance the remaining amount, but they definitely didn’t see a 50% increase on their future payments coming! And while people like me can simply stop searching, others who are bound with contracts can do nothing but go for the loan anyway or pull out of the whole thing and pay a certain penalty to the developer for doing so.

I’m not an expert in economics but things seriously don’t seem right with the new Housing Bank decision, I mean you can’t simply cut down the people’s purchasing power just like that. I just hope this isn’t an indication of the Lebanese Lira being in a bad situation now and I also hope these amendments are only a temporary measure. Otherwise, I guess the real estate market is expected to go into stagnation no matter how developers try to convince the public that it is a resilient sector!

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Here’s How Much You Should Now Pay When Leaving Beirut Airport

The minute President Aoun pased the salary scale and tax hike laws 2 days ago, the civil aviation authority at Beirut Airport instructed all operating airlines to start collecting an exit tax as of Wednesday (August 22nd). But unfortunately people remained clueless about the exact fees and exceptions since no details were provided by the government except for the article published in the official journal which (almost) no one reads…!

As per article 9 of law #45, here are the fees to be paid:

  • For economy class 60,000L.L ($40)
  • For business class 110,000L.L ($78)
  • For first class 150,000L.L ($100)
  • For travelers aboard private jets 400,000L.L ($266)

Note that passengers aboard flights with distance less than 1,250Km are exempted from this tax, so you’re clear if you fly to Cyprus, Greece, Turkey, Jordan, and other nearby destinations.

I assume those who have already purchased their tickets before Wednesday are paying the exit tax in cash at the airport, but I’m not sure whether it is going to remain like that in the future or airlines will simply add to their tickets prices…

A lot of posts/messages are circulating about the new taxes by the way but most have incorrect figures, so make sure to refer back to the this issue of the official journal for the exact figures and consult your lawyer for additional info.

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