Lebanon: Escalating financial fears and warnings of the worst

Waseem Al-Zuhairi - Beirut

There is no disagreement in Lebanon on the seriousness of the economic and social financial impasse in which the country is undergoing. The scream of the productive sectors is rising in parallel with the increasing state of boiling in the street.

This worsening living situation, coupled with widespread corruption, poverty, unemployment, poor services, and rising public debt, have led local and foreign actors to warn of an economic and financial meltdown that leaves the country in the dark.

In light of this fact, and in light of the recent appreciation of the dollar against the Lebanese pound in the markets, and the impact of hundreds of thousands of Lebanese taking to the streets in most areas condemning the government and the political class and economic trends adopted there are fears of the devaluation of the local currency, or the default of the state Within months, unless Lebanon receives financial support from abroad.

According to economist Elie Yachoui, Lebanon is facing a deadlock economically, pointing out that the local currency may collapse, and may stop paying debts unless things are rectified and the formation of a government of specialists.

Joshua said that the fallout of the devaluation, if any, is reflected in the rise in prices and increasing public anger in all regions, pointing out that Lebanon will not quickly get difficult currencies, either within the framework of the "Cedar Conference" of donor countries to support Lebanon, or through external borrowing. Of the country's financial conditions, its negative ratings, and the loss of confidence in the political class.

Absence of a solid economy
On the nature of the economic and financial crisis, Yachoui said that all official spending, borrowing and borrowing since the early 1990s did not provide the necessary infrastructure that the country needed to encourage investment and build a solid economy.

He added that Lebanon has not been able to build an economy of the size of the accumulated debt, which lost the ability to secure fixed sources of foreign currency.

He explained that the Arab investments previously formed between four and five billion dollars annually, and that the remittances of Lebanese abroad were about nine billion dollars, in addition to the possibility of external borrowing.

He said that these favorable circumstances obscured the mistakes and internal problems, but pointed out that things changed since 2011 after the events, wars in some countries in the region, in addition to fluctuations in oil prices made it difficult to secure foreign currencies.

Joshua considered that the size of the debt, the need to finance it, in addition to waste, thefts and the exit of capital, made the Central Bank reserves decline dramatically.

After a budget deficit of 11.4% in 2018, the Lebanese Ministry of Finance predicted that the budget deficit in 2019 will decrease to about 7%, while the IMF believes that the total budget deficit will reach about 10%.

Don't stop paying the debt
Economist Ziad Nasr al-Din said that Lebanon will not stop paying its debts because it is preparing to pay the next installments, stressing that there is an internal decision to initiate reforms.

Nasreddin felt to Al Jazeera Net that stopping the payment of foreign debt means the end of the country, and pointed out that the Lebanese banks have deposits worth two hundred billion dollars, has expressed its willingness two years ago to enter a significant contribution.

He explained that the unemployment rate reached 45% due to the economic policies followed, and that the public debt ratio is close to 90 billion dollars, and that Lebanon imports 20 billion dollars, while the export rate is about two billion dollars.

Nasr Eddin felt that everyone knows that any failure of Lebanon's obligations and any change in the exchange rate will lead to the end of the role of banks trying to distance themselves from the economic crisis, as he put it.

He said these banks have an important part of the responsibility and should play a role to save the situation, noting that they have made profits of 22 billion dollars since 1992.