Economic recession hits most Lebanese hard


Shamseddine said if prices continue to rise with the removal of subsidies, basic needs will become beyond the reach of most Lebanese, adding that 65% of employed Lebanese earn their wages in pounds and 70% of them earn a salary between LL 1.5 million to LL 2.5 million. “The basic food basket costs LL 2.1 million per month for a household of four, and we have not yet factored in the electricity, generator, telephone and water bills, nor the charges. other costs of living. What is needed is a salary of between LL 6 million and LL 7.5 million, which is impossible.

The government’s proposed “payment card” to support the country’s poorest families is a solution, but Shamseddine warned that if publicly funded it would only serve to increase inflation and the only solution was to attract funding from abroad.

Zuhair Berro, president of the Lebanese Association for Consumer Protection, doubts the long-awaited payment card for the poorest families in Lebanon, recently approved by parliament, will see the light of day anytime soon.

“Parliament approved it and passed it on to the government, the government is an interim administration that refuses to meet, so how are they going to work to implement and issue this card to the people? Berro asked, adding that the idea for the payment card was first proposed by his association in February 2020.

The purchasing power of the Lebanese will continue to decline with the removal of subsidies, until the payment card becomes a tangible reality, said Nassib Ghobril, chief economist of the Byblos Bank group.

“The mechanism of the card is not clear, the source of funding for the card we are talking about so much is not there, there is no supervision on the pricing of goods and some merchants are taking advantage of this situation and set prices for goods above the price. [black] market rate. “

“We don’t know when the card will materialize, how it will be distributed, who will receive it, or how long it will take for its implementation. It certainly won’t be next week or the week after, ”Ghobril said. He added that Lebanon was not the first country to go through a liquidity crisis and loss of confidence, but in other countries that have gone through similar crises, there was a government that took decisions quickly to stem the collapse.

“No decision has been taken since September 2019 to deal with the financial and economic crisis. If a decision had been made at the time, we would not be in the situation we are in now, ”said Ghobril.

Private sector companies are currently operating with “zero visibility” and are in continuity mode, Ghobril said, adding that while some companies have made cost-of-living adjustments to employee salaries, they cannot keep up with the hike. prices. Nonetheless, private sector companies have been proactive, repaying bank loans, restructuring their operations, diversifying their product lines, hiring financial advisers.

But nothing can replace systemic reform and a decision in this regard by a functioning government.

“I do not see the formation of a new government. Those in power would rather continue to bicker rather than form a new government that will be forced to implement reforms that help the people, reforms they don’t want because their interests lie elsewhere, ”Berro said.

He said that the interim government of Hassan Diab and the majority of MPs in parliament continued to use grants to serve the interests of traders and monopoly cliques in Lebanon, thereby enriching them at the expense of the people, instead of using cash. targeted grants to help the poorest and most in need.

Ending the subsidies, however, while stopping the flight of hard currency, will have a terrible impact on people’s daily lives.

“The lifting of the subsidies was a mistake,” Shamseddine said. “The result is that people lose their ability to meet basic needs as all prices go up. ”

He added that if there are still around a million Lebanese able to withdraw fresh money, those with relatives abroad send them remittances, the remaining 3.5 million will see their power. purchase erode even more.

Ghobril said that while expatriates visiting for the summer are spending money in the country and slightly alleviating the lack of cash, it does not help the average-wage Lebanese. “How do expatriates who spend money in the economy directly contribute to the purchasing power of the employee in Lebanon?” This is not the case. If we were to discuss the order in which decisions should be made, you implement the “payment card” first, then you remove the subsidies, ”Ghobril said.

CALL FOR SANCTIONS

Penalizing and heavily sanctioning the political leaders of Lebanon who presided over the collapse and who continue to preside over the lack of movement in the formation of the government and the decision-making process, is the only way to force any change in government. attitude and restore movement to government, said Habib Zoghbi. , economist, financier and honorary president of the Harvard Alumni Association in Lebanon.

Zoghbi predicts that the crisis will continue in Lebanon for years to come, even with the adoption of a reform plan. Wages and purchasing power of consumers in turn will remain low for some time compared to the region as a whole. “The situation will be appalling for at least three years. The middle class has to either work and get involved in the productive sector in Lebanon, or go and work abroad as many people are doing now, ”Zoghbi said.

One of the ways depositors try to use their trapped dollars, Zoghbi said, is by participating in the capital of manufacturing companies: “Depositors help companies with outstanding loans to banks to pay off those loans by check. . The depositor thus becomes an investor in this company which sells its products abroad and reimburses it in fresh dollars. This practice will likely continue until there are no more such successful manufacturing companies with unpaid debts, and there aren’t many since our manufacturing sector is small.

Zoghbi said that even if the government does nothing or implements reforms, eventually market forces will kick in and the “bottom” can be reached. “When things get very cheap, you will get the interest of expatriates abroad who will come back to invest in manufacturing, as Lebanese products become cheaper and more attractive abroad. There will be opportunities to buy things at dreamy prices and investors all over the world are looking for such cheap opportunities, ”Zoghbi said. He added, however, that even if the market may correct, this will not be noticeable for most Lebanese. Long-term change requires a return of stability and confidence in the country.

Small business owner and Beirut resident Aouni, now in his sixties, closed his antique and souvenir shop in Beirut’s Saifi village in 2019, after Solidere raised his rent. Today, he spends his days fishing along Beirut’s rocky waterfront. “We are currently paying the generator 350,000 LL per month for 6 amps, this will probably increase. We depend on help from family working overseas, I also have some running out of savings. But I am better than most, I still have my stock in a warehouse and when the situation improves I can sell it, ”Aouni said, sounding an optimistic note, but stressing the importance of family ties. close to the Lebanese without whom many could not survive.

Berro is not optimistic that anything will move forward or improve in Lebanon as long as the current ruling elite is unscathed. He doesn’t see any change anytime soon and isn’t optimistic that the election will change anything.

While keeping a little hope, Zoghbi is skeptical of any serious movement leading to serious reforms: “At the moment, I am pessimistic, I do not see light at the end of the tunnel. We have a constitutional problem, but let us remain hopeful. There may be a change in mood, it is possible. Major sanctions against political leaders, more international legal actions that heavily penalize them can force them to do something, ”Zoghbi said.

Ghobril said that while market forces are forcing consolidations in the private sector and private sector companies do not stand still, decisions and reforms by a functioning government are urgently needed. “It’s not that we don’t see the light at the end of the tunnel, it’s that we wait to see the tunnel!

Copyright © 2021, The Daily Star. All rights reserved. Provided by SyndiGate Media Inc. (Syndigate.info).


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