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Lebanese choose beer over banks

dvernb

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Faced with the choice of leaving their savings stuck in the bank or investing them at a huge loss, some Lebanese people are opting to take a punt. For them, it’s the only sensible option in a financial system warped by crisis.

Largely locked out of their dollar deposit accounts since late 2019 when the Lebanese pound crashed and the banking system buckled amid widespread political protests, some savers see investments in export-focused companies as a way to access hard currency and get something for their ":LOL:lars", the nickname for U.S. dollar-denominated deposits 'trapped' in Lebanon's banks.

Alcohol exporters, including craft brewers and gin merchants, are a popular choice.

"If you invest with me today trapped dollars I’ll give it back to you in fresh dollars," said Kamal Fayad, chief executive of 961 Beer, a Lebanese beer exporter.

Under informal capital controls, depositors can still write cheques on their U.S. dollar-denominated accounts but those cheques cannot be used abroad and if sold at local exchanges they lose at least 75% of their value.

The steep discount reflects the predicament of having dollars parked at Lebanese banks. Starved of dollar funding, the banks limit customers' access to their funds and currently pay out at a rate of 3,900 Lebanese pounds to the greenback, around a quarter of the value of dollars on the black market.

Fayad said he was in talks with investors to raise the equivalent of over $1 million which would include between $3 million-$4 million :LOL:lars.

"Investors prefer to take the risk on me rather than keep money in the bank, at least I'm doing something good for the industry. I'm safer today to them than a bank," he said.

The willingness to take the financial hit reflects despair over Lebanon's path out of crisis, which has been blocked by political infighting compounded by a devastating explosion at the capital's port last year.

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https://www.reuters.com/world/middle-east/financial-surrealism-lebanese-opt-beer-over-banks-2021-06-17/
 
We stare in disbelief at this crisis in Lebanon but our precarious footing could turn south at any moment and we could face a disastrous crisis like theirs. It's amazing how an export like Alcohol could be lead to hope for those with enough savings to get in on it.

 
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