Beirut - Marwa Shaheen - Beth:

A report issued by the World Bank stated that the economic crisis that Lebanon has been suffering from since 2019 is a fabricated crisis orchestrated by the political class that has ruled Lebanon since the end of the civil war.

The report pointed out that the deliberate recession in Lebanon is the arrangement of the leaders who rule the country and have long controlled the reins of the state and monopolized its economic benefits.

As stated in the report:

This hegemony has persisted despite the severity of the crisis and is endangering the country's long-term stability and social peace. Lebanon's economic development model, which thrived thanks to large inflows of capital and international support in exchange for promises of reforms, has gone bankrupt. Moreover, the collapse is occurring in a highly unstable geopolitical environment, which increases the urgency of addressing this acute crisis.

 In a press release issued by the World Bank on January 25, 2022, it stated that the scale and scope of the deliberate recession that Lebanon is currently witnessing is leading to the disintegration of the main pillars of the political economy model that has prevailed in the country since the end of the civil war.

 This is manifested in the collapse of basic public services, the persistence of debilitating internal political disputes, the hemorrhage of human capital and a large-scale brain drain. In parallel, the poor and middle groups bear the brunt of the crisis, the groups whose needs were not originally met by the existing model.

Regarding the extent of the disaster and the impact of the crisis on the Lebanese economy, the Economic Monitor for Lebanon report estimates that the real GDP fell by 10.5% in 2021, following a contraction of 21.4% in 2020. In fact, Lebanon’s GDP decreased from nearly $52 billion In 2019 to a projected level of $21.8 billion in 2021, recording a contraction of 58.1%, the sharpest contraction in a list of 193 countries.

The deterioration of the Lebanese pound exchange rate led to a significant jump in inflation, whose rate is estimated to have averaged 145% in 2021, to record the third highest rate in the world after Venezuela and Sudan. Inflationary effects are highly regressive factors that affect the poor and middle class the most, and more generally those on fixed incomes such as pensioners. Food price inflation remains a major concern because it constitutes a larger proportion of the expenditures incurred by the poorest families who face great difficulties in meeting their basic needs in light of the deterioration of their purchasing power.

Commenting on these statements, Saroj Kumar Jha, Regional Director of the Mashreq Department at the World Bank, said: “Deliberate denial in the midst of an intentional recession leaves long-term damage to the economy and society. After more than two years of the financial crisis, Lebanon has not yet defined a credible path to recovery and economic and financial stability, let alone embarked on this path, and the Lebanese government must move urgently towards adopting a credible, comprehensive and equitable plan to achieve stability and overall financial recovery and accelerating its implementation if it is to avoid the complete destruction of its social and economic networks, and to stop immediately the bleeding of irreplaceable human capital. The World Bank reiterates its willingness to continue supporting Lebanon in meeting the urgent needs of its people and reducing challenges that affect their livelihoods.

Many economic experts in Lebanon say that the political game has been exposed after the issuance of Circular No. 161 by the Central Bank of Lebanon regarding allowing citizens to withdraw money in foreign currencies at an exchange rate equivalent to 24,000 Lebanese pounds to one dollar, which led to the recovery of the Lebanese pound about a third of its value. As the price of the US dollar against the Lebanese pound decreased from 35,000 to 23,000, which means that the Bank of Lebanon and the ruling class can actually control the exchange rate of the lira against the dollar and control the collapse in the parallel market, but the state represented by the political class, quite simply It does not want to control the collapse, as it is taking advantage of the collapse that is taking place, and it is seeking today to bring about some positive changes in the economic situation in order to reduce popular anger against the political class before the parliamentary elections next May.