Report: Lebanon suffers severe economic crisis due to debt accumulation

Alanbat - Sarah Omat

  Lebanon is experiencing a severe economic crisis after debt accumulated over successive Governments 30 years ago without achieving achievements amid excessive spending.

Perhaps the most serious situation in Lebanon's economy has been the paralysis of banks since 2019, which is the most detrimental to daily transactions and services.

 In addition to the unprecedented collapse of the national currency, which has lost more than 90% of its value, the negative repercussions of this collapse on the various health, educational and commercial sectors, the most important is the decline in the purchasing power of citizens, more than 70% of whom are below the poverty line.

 According to the economic report prepared by the National Information Agency (NIA), for the Federation of Arab News Agencies (FANA), "After Lebanon's first place in tourism, education, medicine and others, the first ranks in terms of inflation, economic collapse, hunger and others are taken over".

But hope still fondles the resilient Lebanese and those who cling to their homeland. This is reflected in the large influx of expatriates during the summer and holidays, who contribute to revitalizing the tourist, commercial and economic sector through their hard currency into the country.

Lebanon's Council of Ministers sought to address and exit the crisis, most notably the signing of a preliminary agreement with the International Monetary Fund (IMF) to obtain a $3 to $ 4 billion aid program, which required the final agreement to implement eight reforms, most notably "Capital Control", the restructuring of banks, and the rebalancing of the financial sector, but unfortunately only the law amending bank secrecy and approving the 2022 budget has been passed so far.

The Government has also prepared an economic and financial recovery plan that has not yet seen the light of day. In this context, economist and financial expert Dr. Bilal marks a talk with the National Media Agency (NIA) Savings owners were unable to withdraw their money after the crisis prevented them from their accounts in US dollars or were told that the money, they could now withdraw was only a small fraction of their original value, and the currency collapsed, pushing a large part of the population into the ranks of the poor.

He added, "The severe economic crisis began in 2019 when the financial system collapsed under the weight of sovereign debt and unsustainable ways in which it was financed while politicians have yet to come up with a clear-cut and actionable bailout."

He added that Lebanon's economy has become in the midst of collapse for a number of reasons that may start with poor governance and not end with a debt crisis that has been exacerbated by the political crisis and the coronavirus pandemic.

Public debt amounted to more than 175 per cent of gross product, one of the world's highest indebtedness rates at a time of high inflation rates near Lebanon's first place globally, in addition to "The bombing of the era - the bombing of the port of Beirut on 4 August 2020, which hit the Beirut port movement at heart and caused enormous losses at the human, stone and economic levels.

Over the past three decades, Lebanon's economy had relied on tourism and services, primarily financial services. Since the end of the civil war at the end of the 1980s, following the adoption of the Taif Constitution, which had ended 15 years of absurdity, Lebanon had been unable to reactivate its productive sectors, such as agriculture, light manufacturing and various handicrafts. Since 2010, government policies of successive governments in Lebanon had tried to find some solutions to activate the food industry and some artisanal work, but all of those attempts had been hampered by, inter alia, the inability to stimulate the said sectors and the inability to secure the necessary infrastructure.

Lebanese live today with anxiety and suspicion, and carry them to a new peak of a dramatic collapse that has not subsided since autumn 2019.

This collapse began to appear years ago, precisely since 2015. and are busy with their living conditions, after the collapse of the lira at the beginning of 2023 reached a shocking level United States dollar exchange rate exceeded LS 145 thousand last January, the citizen is awaiting revelations at several levels after becoming certain that all attempts and rescue plans prepared or discussed have become past and unenforceable or will not see the light of day.

As for the fate of negotiations with the International Monetary Fund (IMF) to obtain a $3-4 billion aid program at a time when its required terms have not been implemented s Office ", which is increasingly complicated by the nine-month presidential vacancy following the expiration of former President Michel Aoun's term of office, Parliament's inability to legislate and the narrow limits of the powers of the caretaker Government, In addition to exacerbating political differences and stakeholders' conflicts on how to emerge from the crisis or at least on how to stop the collapse and deterioration.

According to a sign that Lebanon's political authority appears to have favored denying rather than going to address financial and economic crises, it has postponed reforms and the adoption of necessary and necessary laws.

He revealed that a fiscally overstretched Lebanon was awaiting several economic entitlements this year to further inflation. Lebanon's officials looked forward to a recovery plan and a program with the International Monetary Fund (IMF) that would bring the country out of crisis. All plans to recover and emerge from crises were postponed, including an agreement with IMF.

Over the past year, Lebanon has recorded 2022 worst decline in its history, with inflation in the country at more than 1400 per cent since the start of the economic crisis in 2019, while the Lebanese pound continues to register a record drop against the dollar. Against this deterioration, the incapacitated government is still seeking to launch a plan "Economic recovery", through fiscal measures and legislation aimed at boosting growth and reducing the deficit in a country that imports 80% of its needs from abroad.