Demonstrations in Lebanon have been going on for a month without interruption, but the most noteworthy thing is the recent closure of banks, triggering a panic that the country did not witness even during the civil war.

Author Sybil Rizk said in a report in the French newspaper Le Figaro that the opening of some agencies for a week did not satisfy customers who refuse all transactions in foreign currency, and also published videos of violence in banking offices that were forced to close for security reasons.

But this underscores the seriousness of the crisis in Lebanon, which is already suffering from an unprecedented economic crisis.

The problem is the emergence of a liquidity crisis in the banking sector, as well as the devaluation of the Lebanese pound, which has lost between 20 and 25 percent of its value in non-banking markets, while the government has been working to maintain currency stability for 25 years.

The writer reports that many experts talked that the bankruptcy of Lebanon is inevitable, and stated that the Central Bank of Lebanon began to mobilize its foreign currency reserves at great cost, providing a return of about 15% over three years, especially the dollar.

The writer said that the Lebanese state's debt, which is already one of the largest in the world, has been added to the central bank's debts, not to mention the debts of companies and families that represent 91% of the GDP.

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Loss of deposits
The writer quoted one of the few bankers who encouraged and spoke about this crisis without revealing his name; that "the Lebanese think that the banks closed because of the revolution, but they do not know that the entire banking sector needs a comprehensive recapitalization, and they will lose some of their deposits; Insane. "

"The liquidity crisis is not the only one that puts the country's economy at risk," he said. "The problem is somewhat similar to the big crisis in the US in 2008. It is the result of a disturbance in the balance between deposits and how they are used.

The writer stressed that the Lebanese economy is mainly based on "dollarization" by more than 70%, where the value of liquidity of currencies that are still available in the financial system is about ten billion dollars out of 262 billion dollars of assets. The vast majority of consumed goods in Lebanon come mainly from abroad, with agriculture accounting for only 2.9% of GDP and industry about 8%.

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Structural defect
According to the writer, Lebanon consumes unaccounted dollars for three decades and without investing them in sectors that can recover them in the future, but this structural imbalance, which translates into a record current account deficit of 22% of GDP, has been covered by massive inflows of capital. the money.

The writer pointed out that the continuous migration of Lebanese is behind the record level of remittances to their country of origin, in addition to transfers of speculation in dollars coming from outside the country.

She noted that this model suffered setbacks on several occasions, before being rescued by capital support, especially in 2002, during the Paris II conference, which mobilized the international community to support Lebanon, or after 2008, when many Lebanese abandoned the international financial centers. In crisis in search of a tax haven in Beirut.

Since 2011, the dollar pump has stalled, the fiscal deficit continues to rise, and while the financing needs of economic institutions are about $ 15 billion a year, inflows have fallen by less than half. To reactivate it, the central bank governor doubled costly financial engineering, but to no avail.

The writer added that the last attempt to save this model dates back to the days of the conference `` Cedar '' held in Paris in April 2018, which was based on the provision of subsidized loans for structural reforms and a financial adjustment process.

But the Lebanese political class, which is based on a collective action involving all political forces and the exploitation of state resources, has proved its inability to re-reform the way it administers the system, as well as its ability to resist the possible collapse of the economic and financial system.

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