Months after the Lebanese revolution over their ruling political class, the value of the lira collapsed against the US dollar, and their purchasing power collapsed with it. Prime Minister Hassan Diab told The Washington Post in May that many of his citizens had stopped buying meat, fruit and vegetables, and that they might find it difficult to secure bread.
The rise in food prices to three or four times during a few months was accompanied by blackouts due to the state's inability to finance the import of fuel used in power generation, and these events coincided with the Corona pandemic that prompted dozens of companies to close their doors and lay off their employees.
This deteriorating economic situation was reflected in social reality, resulting in an unprecedented crisis.
This coverage monitors the features and causes of the crisis through economic figures, data and indicators ...
Lebanon .. basic information
Economy blown politics
The economic crisis in Lebanon is directly related to the nature of the complex political system, the methodology for managing the developmental file in the state, and the differences in the major options between the parties.
This crisis represents the greatest threat to the country's stability since the civil war that took place from 1975 to 1990. The following chronology shows the major events that have taken place in Lebanon, and the extent of its impact on the economic level:
The Lebanese economy ... the fragile composition
Unlike most of the Arab countries surrounding it before 1975, Lebanon was dependent on the pattern of free economy, private initiative, investment promotion, foreign capital attracting, and consumer style. The banking and financial sector flourished through the law of cash, credit, and confidentiality of deposits, as well as the tourism and services sector in general. Because of the flow of deposits from the tense Arab ocean.
Although these liberal policies recorded economic success, they were socially inadequate, as they devoted an imbalance in income and wealth, and large social and class differences, and that was one of the reasons on which political differences and military clashes were based subsequently.
Because of the fragility of this economic pattern, successive political crises, wars, internal and regional divisions, and the state of political paralysis have sometimes played a role in the collapse of the economy, as well as the absence of appropriate economic and financial mechanisms and policies and effective development plans. Among the most important factors of shortcomings in the Lebanese economy, which were the cause of the crisis:
Lebanon's reliance on external borrowing to finance reconstruction.
Building the economy primarily on the services sector (83% of the total output), tourism and the flow of external capital.
Decline in productive sectors, such as agriculture and industry.
- Significant differences in the distribution of wealth regionally and socially.
Lebanon has turned into a model consumer bank-financed country.
- The administration was not structurally reformed, as it remained subject to quotas and favoritism, which perpetuated corruption.
The accumulation of internal and external debt gradually with debt service with high benefits.
Electricity consumption - for example - is about half of the external debt, according to World Bank estimates.
Increasing the deficit in payments annually.
An inflated banking sector pays fictional interest on deposits.
As for the direct causes that have accelerated the aggravation of the current crisis, they can be summarized in the following points:
- The decline of the central bank reserves.
Low Arab and foreign deposits.
Remittances shrinking.
International donors failing to honor their commitments and linking them to reforms.
The effects of Caesar's law imposed on Syria.
The effects of the Corona crisis since the beginning of 2020.
The lira .. the story of the ups and downs
The Banque du Liban was established by the Monetary and Credit Law promulgated on August 1, 1963, but it officially started operating on April 1, 1964, and its tasks include setting the price of the lira against the dollar.
The Lebanese pound witnessed the ups and downs affected by the successive Lebanese crises, and its official price was fixed at 1907.5 pounds per dollar in 1997, and since last October, it witnessed a rapid decline, as it lost in months more than it should lose in two or three decades in natural conditions.
Economic growth under stress
Affected by successive political crises, the Lebanese economy witnessed periods of decline, the most prominent of which was during the 1982 Israeli invasion, where the recession was severe, reaching -36.79%.
Lebanon .. indicators and paradoxes
The name of Lebanon in the data of international bodies and organizations is associated with several paradoxes at the economic level, some of which indicate factors of abundance and strength, while others indicate factors of weakness and shortcomings, and the following infograph shows some of these indicators:
Photo crisis
The human cost
Despite the high rate of suicide in Lebanese society due to the disruption of family and social relations compared to neighboring countries, the inability of some Lebanese to provide the basic requirements for their families from food, medicine or medicine, pushed more of them to suicide. The following are the victims of the wave associated with the deterioration of the living conditions:
Lebanon, to where? Experts determine the crisis exits
In this video, three Lebanese experts identified possible exits to the crisis that hit their country, and economist Elie Yachoui, university professor Walid Fakhreddin and financial expert Walid Abu Suleiman gave their answers to the 6 most important questions related to the crisis and its implications.
Staff
Edited by: Zuhair Hamdani and Muhammad Dawood Al-Ali.
Infographic: Mustafa Abu Ein, Jihad Ajenji, Faris Al-Khatib, and Imad Katoush.
Photography: Ali Mortada and Ali Majed.
Archive: Khawla Faraj Allah.