In a dialogue with Al-Jazeera, the financial and economic expert, Walid Abu Suleiman, says that the Lebanese crisis is four-dimensional: political, financial, economic and monetary, and he believed that the solution lies in continuing negotiations with the International Monetary Fund.

1 - The crisis in Lebanon is political or economic?

The crisis has become four-dimensional: it is political, as we are witnessing political militarism between the powers, which exacerbates the crisis, and financial as it has caused a great deficit, and economic as it disrupted production and caused widespread unemployment, and cash as a result of the banking crisis; So what we need today is a positive push through a government amendment or change, whereby the government is given exceptional powers.

 2- What about the electricity sector is one of the reasons for the high public debt

The electricity sector has depleted, since the end of the Lebanese civil war, about 37 billion dollars, and this number constitutes about 40% of public debt in Lebanon, and the electricity deficit costs the state budget between 1 and 1.5 billion dollars annually.

The successive authorities were unable to find a sustainable solution, and Lebanon remained facing a production deficit, obsolete laboratories, encroachments on the distribution network, and weak collection, as political disputes entered into this sector, and led to what we have reached.

And the previous Lebanese government headed by Saad Hariri approved in 2019 a plan to reform the sector, which was adopted by the current government, and stipulated that electricity be provided 24/24 this year, but the rate of rationing reached 70% of the hours of power supply, and what was pledged to accomplish was not done.

3- The banking crisis and cash reserves

Lebanese banks have about $ 116 billion in deposits, 75 billion of which are certificates of deposit in the Bank of Lebanon, about 30 billion are loans to the private sector, and bonds worth $ 11 billion.

Lebanon has stopped paying Eurobonds, which have lost 90% of their value in the secondary market, and private companies have failed to pay loans estimated at 9 billion dollars, while 75 billion dollars, the banks own 55 billion with the central bank, and with respect to the remaining 20 billion they are a foreign cash reserve with the bank Central.

In short, banks today have a solvency and liquidity crisis at the same time.

4- Where did inflation reach?

The central bank has been concerned with fixing the exchange rate of the lira against the dollar at an average price of 1507.5 since the early 1990s, and it is almost unable to do so now.

With the support of basic commodities such as fuel, medicine, flour and wheat, the volume of import in Lebanon is about 20 billion dollars, and the Lebanese market needs 600 million dollars per month to secure the import of basic materials, and there is a gap between supply and demand estimated at 4 times the amount insured by the Bank of Lebanon, which is 120 million dollars per month Approximately.

The domestic currency block increased by 130% between June 2019 and June 2020, which raised inflation.

Added to this is the loss of confidence in the local currency, and the Lebanese stockpiling about $ 6 billion in homes, which can only be returned to the banking system by undertaking radical reforms and restoring confidence.

5- The size of the Lebanese public debt

The size of the Lebanese public debt exceeds 90 billion dollars, according to the official exchange rate, 60% of which are bonds in Lebanese pounds, and the rest in dollars, distributed over 31 billion dollars in Eurobonds, and two billion are debts in bilateral contracts.

6. Possible solutions out of the crisis

Negotiations must continue with the International Monetary Fund, because Lebanon needs to seal the fund as approval and approval of the government bailout plan, which will give it confidence in donors and investors.

And if the Lebanese team that negotiates the IMF cannot unify its numbers regarding the reality of the financial losses the economy has suffered, we will face a problem in the negotiations.

As for the other solutions available, The technical tools are limited, but what Lebanon needs to start emerging from the crisis is determined in the following:

1. Restoring confidence in the Lebanese authority

2. A government amendment or change

3. Begin repairs as soon as possible

4. Unifying the exchange rate of the lira

5. Defining losses and standardizing their numbers in negotiations with the International Monetary Fund.