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As inflation drives Lebanon’s currency to historical lows the country faces a devastating financial crisis. The crash highlights a grave economic crisis that has left half the population living below the poverty line. The World Bank says that the financial crisis is one of the worst the world has seen in 150 years. The crisis is a consequence of thirty years of financial mismanagement by successive governments coupled with the global pandemic and the blast in Beirut.
In the previous months, the Lebanese economy was in freefall but now it might be nearing its collapse. All economic and financial experts are talking about the hard crashes and total collapse.
Lebanon’s economy might be at the brink of a collapse but not in some areas as beaches, cafes, restaurants, and pubs remain crowded. The 90% devaluation of the Lebanese Pound that has led to hyperinflation isn’t a problem for those who have access to foreign currency. Analysts have observed that the only means of survival is for those who are earning in dollars.
According to the World Bank, the crisis that Lebanon is fast descending into is likely to be ranked amongst the world’s worst crises. The United Nations says that 1.5 million Lebanese, an estimated third of the population need vital assistance. A large ex-pat community, at least double the size of Lebanon’s population is helping keep its economy afloat. Remittances from the diaspora have been the main source of capital inflows for years.
A lack of foreign currency has created shortages of fuel, electricity, medicine, and other essentials. The crisis is said to worsen as the state gradually lifts subsidies. As a result, the price of the Lebanese Pound is destined to take a huge plunge against international currencies.
Citizens are protesting on the streets and cars are lining up at petrol stations for a share of Lebanon’s scarce supply of gasoline. The shortages of basic necessities have pushed up the costs of the essentials. Essentials like bread have witnessed a significant increase in its price where the price has hiked five times this year itself. The record inflation has left citizens getting much less in return for their money. At more than 10-times its rate against the US dollar, the Lebanese Pound is trading at an unparalleled high on the black market.
Corruption and mismanagement by the divided political class in power for decades are to be blamed for nearly bankrupting the state.
Many who are able to are saying that they are planning their future abroad while educated Professionals have been leaving in large numbers. If politicians don’t agree on a government that can restore international confidence many are warning of a human catastrophe. The outraged Lebanese public wants their government to solve the crisis fast. However, with the economy on course to contract by 20% this year the problems are far from over.
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