By: Layan Odeh and Dana Khraiche.
With assistance by: Paul Wallace and Abeer Abu Omar
Bloomberg, Feb. 16, 2020
Lebanon’s Middle East Airlines scrapped a decision to reject payments in the local currency, hours after the nation’s president warned against the move and questioned its legality.
As backlash mounted on Sunday, the airline 99% owned by the central bank reversed the announcement to accept payments only in foreign currency, according to its spokeswoman. The company will hold meetings to discuss solutions and mechanisms that would take into consideration the interests of the Lebanese people and the state of the firm, Al Jadeed TV reported.
Lebanon is grappling with its worst economic and political crisis in decades, following months of protests that forced the previous government to resign. The pound, pegged to the dollar since 1997, is losing value on the black market as shortages of foreign exchange paralyze businesses and threaten to tip Lebanon into default.
The airline’s initial decision prompted condemnation from President Michel Aoun, who said air tickets should be priced in the local currency as the law stipulates.
Lebanon long relied on remittances from millions of citizens living abroad to finance its current-account deficit, prop up the banking system and bolster the pound’s peg. But with capital outflows on the rise, the central bank has been forced to ration dollars and local lenders have imposed limits on withdrawals and the movement of funds abroad.