World Bank: Lebanon’s collapse threatens social peace

The collapse began in October 2019 and plunged more than 75% of the country’s population into poverty. The same political class blamed for decades of corruption and mismanagement that led to the crisis has done next to nothing to help Lebanon out of the crisis.

The Lebanese pound has lost more than 90% of its value and there are several exchange rates, reflecting the severity of the crisis. Banks imposed informal capital controls, depriving people of access to their savings.

Despite billions of dollars spent on infrastructure projects since the end of the civil war in 1990, electricity is out 22 hours a day, tap water is largely undrinkable, roads are riddled with holes, Garbage piles up in the streets while the sewage system is flooded whenever there is heavy rain.

The report, which analyzes the end of 2021, estimates a drop in GDP of 10.5% for that year. This comes after a contraction of 21.4% in 2020. This matches earlier reports that the crisis is one of the world’s most severe economic collapses in modern times.

Lebanon’s inflation spike, estimated to average 145 percent in 2021, now ranks third in the world after Venezuela and Sudan, he said.

The report says government revenue is expected to nearly halve in 2021 to 6.6% of GDP, marking the third-lowest ratio in the world after Somalia and Yemen. Gross debt is estimated at 183% of GDP in 2021, placing Lebanon fourth in the world behind Japan, Sudan and Greece.

“Deliberate denial during a deliberate depression creates lasting scars on the economy and society,” said World Bank Regional Director Saroj Kumar Jha. “More than two years into the financial crisis, Lebanon has yet to identify, let alone embark on, a credible path to economic and financial recovery.”

Jha added that the Lebanese government must urgently move forward with the adoption of a credible, comprehensive and equitable macro-financial stabilization and recovery plan and accelerate its implementation if it wants to avoid a complete destruction of its social and economic networks and immediately stop the loss of human capital.

The report came a day after Beirut resumed talks with the International Monetary Fund after the Cabinet held its first meeting in three months. Talks began last year and broke off without a breakthrough amid political wrangling by rival groups.

Later on Tuesday, Interior Minister Bassam Mawlawi said Lebanese police foiled an attempt to smuggle large quantities of Captagon amphetamine tablets. He said they were on their way from Lebanon to the African nation of Togo. From there they would have been sent to a country in the Persian Gulf, most likely Saudi Arabia.

Mawlawi said the pills were hidden in 434 boxes mixed with seven tons of tea. They were confiscated at sea after the smugglers left the port of Beirut.

Captagon manufacturing thrives in Lebanon and war-torn Syria, which have become a gateway for drugs to the Middle East, particularly the Gulf.

The smuggling of Captagon pills has been at the heart of a spat between Saudi Arabia and Lebanon, after more than 5 million pills hidden in a shipment of grenades from Lebanon were seized in the kingdom in April.

In retaliation, the Saudis banned Lebanese products from going or even transiting through the kingdom, a blow for Lebanese exporters.

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