DUBAI (BLOOMBERG) - Lebanon's Middle East Airlines and other carriers operating in the country will no longer accept payments in the local currency, the latest sign of collapsing confidence in the country's decades-old peg to the dollar.

Starting on Monday (Feb 17), the airline 99 per cent owned by the central bank will accept payments made by any credit card or bank check "provided that the operation is in foreign currency", according to state-run National News Agency.

In the wake of the announcement, dozens of customers crowded the MEA offices at Beirut airport - the only one open on Sunday - in the hopes of paying for their tickets in Lebanese pounds, images broadcast on local TV showed, AFP 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 Lebanese pound, pegged to the dollar since 1997, is losing value on the black market as shortages of foreign exchange paralyse businesses and threaten to tip Lebanon into default.

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.

Jamil El Sayyed, a parliament member, said on Twitter that the decision could be illegal. Lebanese law stipulates that any institution owned, financed or managed by the government, fully or in part, is obliged to accept the nation's currency or the official dollar rate set by the central bank.