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Beirut – The World Bank warned on Tuesday that the severe crisis in Lebanon has made the economy vulnerable to a “hard recession”, describing it as “deliberate” with the failure of the forces controlling the scene to contain the collapse, calling for the training of a government to rapidly 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 in the Central Bank, the increase in poverty rates to more than half the population and unemployment. The outbreak of the Covid-19 pandemic, followed by the terrible port explosion on August 4, made the situation worse.
And according to what was expressed in the Arabic text of a report it issued entitled “The Deliberate Depression”, the World Bank considered that “the alleged lack of effective political measures by the authorities has exposed the economy to a difficult recession and prolonged “.
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 imposed strict restrictions on dollar withdrawals, leaving depositors unable 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 100 percent. “
“The lack of political consensus on national priorities seriously hampers Lebanon’s ability to implement long-term insightful development policies,” said the World Bank’s regional director for the Levant, Saruj Kumar Jah.
“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 address structural challenges,” he emphasized.
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 head of the Future Movement, Saad Hariri, has been trying for more than a month to form a government of specialists, but encounters many difficulties, perhaps the most important of which is the insistence of some forces such as the Free Patriotic Movement and Hezbollah to take over. of most of the ministerial portfolios.
