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The crises in Lebanon are worsening and the specter of poverty looms over the daily life of the Lebanese, as they are left to an unknown destination whose articulations are controlled by internal and regional forces with no prospect of a solution.
Figures released by the World Bank’s Economic Monitor for Lebanon were not surprising, which predicted that more than half the population would become poor by 2021 and that the debt-to-GDP ratio would reach 194%, up from 171% at the end of 2019. The real rate fell sharply to -19.2% in 2020, after contracting -6.7% in 2019, considering that the collapse of the lira led to inflation rates that exceeded the 100% limit.
The governor of the Central Bank of Lebanon, Riad Salameh, had warned that the bank could support the financing of the import of basic products only during the next two months, after the usable reserve decreased to the limits of 800 million dollars, while that the mandatory unusable reserve is $ 17.5 billion.
In light of international warnings, meetings of the mixed commissions in the Lebanese Parliament to discuss the issue of backing and mandatory reserves at the Central Bank were unsuccessful, and no procedural decision was issued from a meeting held on Thursday. with the same purpose in the Central Council of the Bank of Lebanon, while information about the proposed measures, including the uprising, was leaked. The support of the food basket is in exchange for replacing it with financing cards for the poorest families, which means that Lebanese face difficult decisions.
Poverty spread
The Lebanese expert on development, social policies and the fight against poverty, Adeeb Nehme, recalls a study issued by the United Nations Development Program and the Ministry of Social Affairs in the mid-1990s, which revealed -based in the Living Conditions Index – that the poverty rate in Lebanon reached 35%, and this figure did not increase until 2019, which broke out at the end of the economic and banking crisis.
Therefore, Nima considers, in a statement to Al Jazeera Net, that between 50 and 60% of the Lebanese population is poor by 2021, which makes the World Bank estimates very realistic. Nehme redefines the meaning of poverty, that any person or family whose resources are not sufficient to satisfy their basic needs is considered poor.
And based on the statistics of the Department of Statistics also regarding the average family income in Lebanon, it was found that 18% of families earn less than the minimum wage of 650,000 pounds a month, and 44% of families earn less of one million and 200 thousand pounds (about $ 150), and that 73% of families have a monthly income of less than 2,400,000 Syrian pounds (about 300 dollars), according to the expert in the fight against poverty.
Nehme believes that the World Bank report under the slogan “Deliberate Depression” accused the authorities in Lebanon – whom he described as “policy makers” – of being responsible for the delay in adopting reform measures. effective, which led to a severe economic depression, in exchange for drowning the Lebanese with the consequences of their corruption and mismanagement of the crises. .
Lebanon is suffering the brunt of a serious financial crisis, the Lebanese are paying the price of its repercussions (Al-Jazeera)Support for the poor at risk
Perhaps the increase in poverty in Lebanon is related to the repercussions of the actions of the central bank, especially at the level of reducing or increasing subsidies, which could make all the basic products that the Lebanese need subject to fluctuations in the economy. black market that controls the value of the currency, after transactions in dollars exceeded the threshold of 8 thousand pounds.
From a banking point of view, the economist Nassib Ghobril considers that subsidizing raw materials was fundamentally not a viable option, because in all the countries of the world it shows in the budgets of governments and the state treasury, not of central banks.
Ghobril believes – in a statement to Al Jazeera Net – that there are parties that want to put the burden of the crisis on the Central Bank, while for a year they have been in charge of ensuring support for the importation of petroleum derivatives with wheat, medicines and medical equipment, and since July 2020, support for the food basket made up of 300 commodities.
Ghobril accuses importers of exploiting the Central Bank’s subsidies, which it describes as “ineffective”, “because it encourages imports in large quantities that are stored, to smuggle a large part of them through illegal crossings.”
Risks of using the reserve requirement
Ghobril points out that the sources that ensure the income of the central reserve of foreign currencies have completely dried up, since the government’s decision to default on the Eurobonds (government debt bonds in foreign currency) last March, and that The Central Bank relied on the flow of deposits from abroad as a source of reserves, but it withdrew to its minimum limits, in addition to the absence of foreign investments that depended on the banking sector in its financial transactions, which led, according to him, to the depletion of reserves in exchange for low income.
Ghobril points out that the mandatory reserve ratio is 15% of all foreign currency deposits in banks, and if the CBE reduces this reserve to 10 or 12%, then the released money should return to the banks and not support, according to your opinion.
According to the banking expert, 4 months ago he presented a proposal to the central bank to use part of his gold reserves, which are estimated at $ 17.3 billion.
According to him, the other solution is to obtain concessional loans from the World Bank to guarantee the cost of support. Governor Riad Salameh claimed that the gold reserves are in the vaults of the Central Bank of Lebanon and that they are free from restrictions, whether in Lebanon or outside of it.
Every individual or family whose resources are not sufficient to meet their basic needs is considered poor according to experts (Al-Jazeera)Escape the crisis
In the dispute over the right to use mandatory reserves, Vivian Akiki, researcher and journalist specializing in economic affairs, considers that “ the Central Bank’s claim to be interested in mandatory reserves is an empty excuse, because before the crisis it had about $ 115 billion in reserves, which means more than $ 90 billion evaporated “How can someone who squandered all these dollars fear wasting $ 17.5 billion?
Akiki pointed out – in his speech to Al-Jazeera Net – that the problem is not in using the mandatory reserve as support, but that Lebanon is under the weight of a severe financial crisis that the Lebanese are paying the price of its repercussions, and He believes that the most beneficial thing is to think about how to use the reserves in productive sectors that can bring new dollars to the country, because continuing the support for a limited period without any alternative plan is only the postponement of a great social explosion.
Akiki expresses his regret that the worst is yet to come, as a result of the successive collapse and the drop in GDP from 52 billion dollars to 18 billion, according to IMF figures, in addition to the migration of about 45,000 Lebanese until last August, while about 65,000 immigrated throughout 2019. And about 40,000 in 2018.
The researcher excludes Lebanon’s access to aid from donor countries and favors its trend towards the model of poorer countries, which could herald an increase in violence and give preference to the language of political and sectarian fanaticism. As for the citizens, they will be busy ensuring their daily livelihood, because the process of political change and reform will become a luxury for them.
For his part, Adeeb Nehme believes that the results of poverty and stagnation have not yet been revealed in Lebanon, which is heading towards a comprehensive and inevitable collapse, and believes that the danger of poverty is not so high in numbers, but because it has deepened, and he hopes that the poor of Lebanon will become poorer, and that no less than 30% of the Lebanese will then depend on humanitarian aid to ensure their daily sustenance, and the great danger, in his opinion, is It will manifest in a dramatic change in the lifestyle of those who were from Lebanon’s middle class, after becoming one of the “new poor of Lebanon.”
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