Worry, fear, concern.
These are the words that come to mind when news channels announce that higher inflation is expected. The annual inflation rate in the United States peaked at 7.9% for the 12 months ending in February, a 39-year high for the country. People going about their daily lives will generally not notice this inflation if their nominal income, which they receive in current dollars, rises as much as prices. However, as an international student from Lebanon, Since late 2019, I have personally experienced what the World Bank has called one of the world’s most severe economic collapses since the 1850s.
My life and that of around 6.7 million Lebanese have changed forever since the beginning of this crisis.
Throughout my teenage life, I learned that one US dollar equals approximately 1,500 Lebanese pounds, or Lebanese liras. The Lebanese pound has been pegged to the dollar since 1997 and has stabilized at this rate over the years. The Lebanese economy was heavily dollarized, meaning that the US dollar was widely used in day-to-day transactions. You can practically buy anything, anywhere, using Lebanese Pounds or US Dollars. Even bank deposits were mostly in foreign currencies.
Since the start of the crisis in 2019, the Lebanese pound has lost more than 90% of its value. Inflation soared by around 145%. The chaos and disruption of daily life that has accompanied the sharp decline in the value of the local currency has been surreal.
Feeling the pressures of currency devaluation and losing faith in the Lebanese economy and its banking system, people rushed to protect their life savings. But when they went to withdraw all the money they could from the banks, they were surprised to find that their deposits were no longer accessible.
Banks had imposed strong limits on foreign currency withdrawals to maintain their reserves. The amount of foreign currency withdrawals per month was capped at $3,000 per month. Any additional amount should be limited and withdrawn to a value well below its face value in USD.
Thus, a new currency was born, named “Lollars” by economists in reference to dollar deposits available in Lebanese banks with a value much lower than real dollars. Not only were foreign currency deposits inaccessible to the Lebanese, but above all, they had lost most of their real value. They are now only worth 30 cents on the dollar.
The country’s imports have also suffered a sharp decline due to the shortage of foreign currency. Some people have had to resort to the black market to buy real US dollars, called “fresh dollars”, to pay for their external needs, such as student tuition, outside of Lebanon. Other basic needs, such as medicine, have become increasingly scarce. Prices for basic commodities, such as fuel, rice and sugar, have jumped by around 500%.
The high inflation coupled with a sharp drop in local wages caused by the devaluation had a major impact on purchasing power. The minimum wage in Lebanon, which was around $450 per month in 2019, is now worth less than $30 per month and the poverty rate has increased significantly.
Driven by the need to support their families, most educated people had to flee the country, resulting in one of the worst brain drain crises the country has ever seen. This has further aggravated the difficult living conditions in the country, as most qualified doctors, nurses and teachers have left the country. The country that was once known for its high level medical and educational services is now struggling to maintain a minimum level of education and decent health care.
Being a Lebanese citizen studying in the United States has been quite a challenge for my family. To cover my tuition and living expenses, my parents had to withdraw their monthly stipend from the bank of Lollars to convert it to US dollars in cash at 20% of its face value. They then had to go back to the bank and deposit the amount into what is called a “fee” US dollar account (or an actual US dollar account) and transfer it to the US to cover my expenses. The hassle of going through this process every month is extremely frustrating and stressful, not to mention the fact that we practically incur an 80% cashback on every dollar withdrawn from our bank account.
Needless to say, it also put a strain on my spending and forced me to become much more vigilant and aware when it comes to managing my finances. That being said, my parents remain grateful to be able to provide me with the college life I always dreamed of at Northwestern, and I feel blessed to be part of the minority of Lebanese who are still able to pursue their dreams of an education. quality at any given time. of the best international academic institutions.
Our beloved country, which was once called the “Switzerland of the Middle East” due to its impenetrable banking system, has now become a failed state and economy. My people are living one of the worst nightmares in modern human history.
Wahib Charamand is a McCormick freshman. He can be contacted at [email protected] . If you would like to publicly respond to this editorial, send a letter to the editor at [email protected]. The opinions expressed in this article do not necessarily reflect the opinions of all Daily Northwestern staff.