PARIS – Lebanon may face the biggest crisis since its civil war, with economists warning the country’s new currency to hit new lows.
Steve H. Professor of applied economics at Johns Hopkins University. According to Hanke, Lebanon is now the first country in the Middle East and North Africa where its inflation rate exceeds 50% for 30 consecutive days.
The sharp rise in the prices of goods and services pushes the country into further crisis. High inflation means that many goods have become unaffected.
Lebanese Food Bank executive manager Soha Zatter said, “We started getting messages from educated people … just email us for help.”
He said, “There is no middle class anymore.”
According to Lebanese economist Roy Badro, Lebanese are heavily dependent on imports, which make up 60% of the goods consumed. The increase in the exchange rate to the dollar, then results in a huge increase in retail prices, due to the very high correlation between imports and consumption. According to the latest report by Credit Libnice, the prices of items of clothing and footwear have increased by 345% alone. In addition, the lockdown measures taken to combat the coronovirus epidemic have resulted in the closure of small businesses and large scale layoffs, which have pushed the country to the brink.
COVID-19 has a “multiplier effect”, BADRO said.
According to Zatter, more than half of the Lebanese population is living below the poverty line. The World Bank estimates that 155,000 families are living below the extreme poverty line.
“If you compare the before and after situation, not only COVID-19, but even before the revolution started in October 2019 … Now people are dependent on NGOs because the government has someone for these people Not a plan, ”she said.
While Lebanese authorities have promised financial assistance to the poorest 43,000 families, there are concerns that it did not reach the right people.
“The list of data for families was so old, some of them were already dead or are no longer living in Lebanon,” Zatter said.
Nonprofit organization Aalan, which has a national suicide prevention helpline, said that suicide reports in the country have doubled this year, from an average of 200 calls per month last year to 400 to 500 per month in 2020.
On a visit to Lebanon on 23 July, French Foreign Minister Jean-Yves Le Drian criticized the country’s leadership, saying, “Help us help you.”
As negotiations with the International Monetary Fund stagnate, Lebanon is left to rely on its expatriate for the inflow of funds.
“Venezuela has oil. Our oil is migratory,” Badro said.
Rabah’s cousin, who lives abroad, used to send money to his family.
Rabah said, “Not many businesses have closed down for the past five months because of COVID and my cousin … now we have to send him the money.”
For many in Lebanon, the only path to crisis is through reform.
According to Makram Raba, a history lecturer at the American University of Beirut, the basic problem is that “no one has any confidence in the political system.”
Rabah said that the Central Bank has dug itself so deep that it is unable to do anything outside the country.
“This was the original sin of the Central Bank,” added Badero, citing a 1997 decision to fix the leather pound rate.
The country’s weak position means it is at a crossroads.
“We’re in the midst of funding growth and a reality check about our economy and even food,” Badero said.