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Beirut (AFP)
The World Bank warned on Tuesday that the severe economic crisis in Lebanon had made the economy vulnerable to a “grueling recession”, describing it as “deliberate” with the failure of the authorities to contain the collapse, calling for the formation of a government that would urgently implement a comprehensive reform program.
Since last year, Lebanon has witnessed an unprecedented economic collapse, which coincided with the deterioration of the value of the local currency, the decline of foreign exchange reserves at the Central Bank, the increase in poverty rates to more than half of the population and unemployment. The outbreak of the Covid-19 epidemic, followed by the horrific port explosion on August 4, exacerbated the situation.
The World Bank considered, as expressed in the Arabic text of a report it issued entitled “The Deliberate Depression”, “the alleged lack of effective political measures by the authorities has exposed the economy to a difficult and prolonged recession.”
And he warned that Lebanon “suffers a serious loss of resources, including human capital, as the brain drain is an increasingly desperate choice.” He considered that “the weight of the current adjustment in the financial sector focuses in particular on small depositors”, in addition to the local workforce and small companies.
Since last fall, banks have placed strict restrictions on dollar withdrawals, making it impossible for depositors to get their money and savings. A black market emerged in which the exchange rate of the pound registered record rates against the dollar, while the official rate was still set at 1507 pounds. This year, Lebanon defaulted on its foreign debt for the first time.
The World Bank suggested that the real GDP growth rate fell sharply to -19.2 percent in 2020, after contracting by -6.7 percent in 2019. It said the collapse of the currency led to “rates of inflation. that exceeded the 100 percent limit. “
“The lack of political consensus around national priorities severely hampers Lebanon’s ability to implement long-term insightful development policies,” said Saruj Kumar Jah, the World Bank’s regional director for the Levant.
He stressed that “the new government must urgently implement a credible strategy to achieve macroeconomic stability, while taking short-term measures to contain the crisis, as well as medium to long-term measures to face structural challenges.”
Despite international pressure led by France, political forces are still unable, due to divisions and disagreements over quotas, to form a government that implements the reforms required by the international community to help Lebanon.
The last government resigned on August 10 due to pressure from the street and due to its inability to make real decisions as a result of the political forces that control it. The resignation came after the explosion in the port, which killed more than two hundred people and the destruction of the vital facility and much of the capital. It is likely the result of neglect, corruption, and storage of a large quantity of ammonium nitrate in one of your warehouses without any protective measures.
The World Bank suggested that the economic crisis would be “deeper and longer than most economic crises,” and explained that “international aid and private investment are necessary for comprehensive recovery and reconstruction.”
French President Emmanuel Macron is organizing a new videoconference with the United Nations on Wednesday to help Lebanon financially, with the participation of some 30 personalities, including heads of state and government, ministers, international institutions and non-governmental organizations.
© 2020 AFP
