By Muzammil Mazhar
Demonstrations have convulsed Beirut and other cities across Lebanon on the evening of October 17, 2019, after the government announced new taxes, which it soon revoked due to popular outrage. The countrywide protests intensified as people directed their anger against the entire political establishment, whom they blame for corruption and the country’s dire economic situation. “Politicians in Lebanon haven’t done enough to stop living standards from falling and have ignored protesters’ requests about the worsening economic crisis,” said Joe Stork, deputy Middle East director at Human Rights Watch. That’s why it’s time to highlight the question “What’s wrong with Lebanon’s economy?”
Lebanese economic growth, reducing since 2011 after the Arab springs, the Syrian conflict, and internal political tensions. In 2019, the economic situation in Lebanon gets worse, raising fears of a collapse of the country. Public debt has kept increasing, reaching more than 155% of GDP in 2019, and is expected to reach 161.8% of GDP in 2020 and 167% of GDP in 2021 according to IMF estimates. Besides, Lebanon is the third most indebted country in the world, after Japan and Greece. In October 2019, the banks obliged to close for two weeks, affecting panic among creditors who saw their withdrawals restrained and their transfers abroad forbidden. Credit dried out, stopping companies from financing imports, and non-performing loans were on the rise. Authoritatively indexed at 1,500 pounds for one dollar, the Lebanese currency is overvalued by 50%.
As for the social life, In Beirut, the cost of living monthly for a four-person family is $2,756 without adding up the rent. While pensions play a key role in providing old-age support, Lebanon’s private social security system has provided very limited services to the elderly. More than 80% of Lebanon’s over-65 population lacks pension and health coverage. Most of them previously employed in the informal economy and the private sector.
On the side of academic education, the annual education and living expenses budget to go to Lebanon College was $16,690 for the 2018/2019 a year.
The newly formed government is in for some real economic and financial challenges. The parliament decided, given the harsh economic situation, that bank loan defaulters will not be prosecuted and will be given a grace period of six months to resume paying off their loans. The government will also work on a national strategy to fight against corruption, expedite its implementation, and issue decrees for the law on the right to access information.
Above that all, Lebanon is facing its worst economic crisis since its 1975-1990 civil war, with a pending $1.2 billion Eurobond payment on March 9. If the government evasions, it would deal another main setback. These financial shortcomings reduce the country’s ability to respond to the coronavirus, from engaging enough qualified health workers to show fever screenings at the airport to equipping hospitals with specialized gear such as respirators for isolation areas. Looming with the human and capital resources needed to control severe virus cases would put an already troubling health care system in dire straits.