The caretaker finance minister has announced a significant increase in the exchange rate used to calculate import tariffs in a bid to bolster government revenues. The new calculation, which has tripled the previous rate from 15,000 Lebanese pounds (LBP) per dollar to 45,000 LBP per dollar, marks the second adjustment to import tariffs within the past year. In late 2022, the official rate was changed from 1,507.5 LBP to the dollar to 15,000 LBP to the dollar.

The government cited its intention to raise wages and pensions in response to inflation as the rationale for this latest move. According to LIMS, this measure is likely to benefit smugglers and encourage customs evasion, rather than delivering the intended boost to government revenues. Legitimate businesses which comply with their customs obligations would be penalized and made less competitive than those engaging in smuggling and customs evasion. LIMS warned that raising exchange rates on imports without implementing reforms to customs procedures could push honest businesses out of the market and further exacerbate the country’s recession.

LIMS added that this measure is unlikely to generate sufficient revenue to support the proposed salary increase. As a result, the government will end up borrowing more from the central bank, further exacerbating hyperinflation and devaluation of the Lebanese pound.

While acknowledging the need to unify exchange rates and bring them closer to market levels for import tariffs, LIMS has emphasized the importance of accompanying this move with broader customs reform. LIMS argued for shifting away from the current system towards a flat tariff rate of 2.5% on all imported goods. By implementing such a reform, the government would discourage customs evasion and expand the tariff base, thus generating additional revenue.

• After Raising The Customs Dollar From 15,000 LBP To 45,000 LBP Per Dollar, What Are The Variables That We Will Touch? March 1, 2023: Naqd, TV Interview AR
• Raising The Customs Dollar…Increases Revenues Or Encourages Smuggling?!… March 2, 2023: Safiralchamal, Article AR
• What Is The Alternative To Increasing The Customs Dollar? This Is What Dr. Mardini Suggested Via Hadath Online, March 2, 2023: Hadath Online, Article AR
• Raising The Customs Dollar Stimulates Smuggling… Chaos And A Black Market! March 3, 2023: Anbaa Online, Article AR
• Customs Dollars Will Fuel Cross-Border Smuggling, March 3, 2023: VDTL, Radio Interview AR
• What Is the Secret Of The “Crazy Import” Of Gold To Lebanon? March 23, 2023: MTV, Article AR