Lebanon to hike import tariffs for second time in three months

Lebanon will triple the tariffs it charges on imports in local currency, according to copies of government decisions seen by Reuters on Tuesday, as the state seeks to boost its revenues amid a worsening economic crisis.

Caretaker finance minister Youssef Khalil requested to change the rate at which customs fees are calculated from 15,000 pounds per U.S. dollar to 45,000 pounds, according to correspondence seen by Reuters.

Cabinet responded with a letter saying it had no objections given the move would "secure additional revenues to help revive the public sector".

Lebanon's local currency has lost more than 98% of its value since its economic collapse began in 2019, trading at an all-time high of 87,000 per U.S. dollar on Tuesday on the parallel market.

State coffers have been drained and public services have suffered as a result, with school teachers on strike for weeks.

Lebanon's government had already effectively increased tariffs on imported goods about 10-fold at the end of last year by changing the rate at which they were calculated to 15,000 per U.S. dollar from the then-official rate of 1,507.5.

"It doesn't respect our money."

Why Lebanon's capital controls law is causing unrest ⬇

✍ @DarioSabaghi https://t.co/8gB8fxSF4s

— The New Arab (@The_NewArab) September 17, 2022

In February, it amended the exchange rate to match, so that the official government rate was 15,000 to the U.S. dollar.

Unifying Lebanon's various exchange rates is among pre-conditions set by the International Monetary Fund nearly a year ago for Lebanon to get a $3 billion bailout, but the lender of last resort says reforms have been too slow.

The country has been moving towards a cash-based and dollarised economy given spiralling inflation and restrictions by banks on transactions.

Also on Tuesday, Lebanon's caretaker economy minister Amin Salam said supermarkets would be mandated to display the pound-to-dollar rate at which goods were priced.

Salam told reporters shops would also be allowed to display the prices of imported goods in U.S. dollars.

(Reuters)