BEIRUT, Jan 23 (Reuters) – Lebanon is suffering from an economic meltdown that began in 2019 when the financial system collapsed under colossal state debts and the unsustainable way they were funded, while politicians have yet to come up with a bailout. Read more

How bad is the situation?

– Gross domestic product plunged to around $20.5 billion in 2021 from around $55 billion in 2018, the kind of contraction typically associated with wars, according to the World Bank, ranking the collapse as one of the worst in the world since the middle of the 19th century.

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– The Lebanese pound has lost more than 90% of its value, driving up the cost of almost everything in a country dependent on imports and demolishing purchasing power. A soldier’s monthly salary, once equivalent to $900, is now worth about $50.

– Poverty rates are soaring in the population of around 6.5 million, with around 80% of people classified as poor, according to the UN agency ESCWA. The situation is getting worse. In September, more than half of families had at least one child who skipped a meal, UNICEF said, compared to just over a third in April.

– The financial system has suffered staggering losses, including about $44 billion at the central bank related to failed efforts to prop up the currency, according to government figures from 2020, a level that is about double economic output. Overall losses, including anticipated sovereign debt write-downs, are even larger.

– Lebanese banks are paralyzed. Savers were frozen from US dollar accounts. Local currency withdrawals apply exchange rates that wipe out up to 80% of the value. During a visit to Beirut in October, US official Victoria Nuland said the Lebanese people deserved to know where their money went.

– Dependent on imported fuel, Lebanon faces an energy crisis. Even before the crisis, the electricity supply was lacking, including in the capital. Today, households are lucky enough to receive more than about an hour a day. Fuel prices have skyrocketed. A ride in a shared taxi, a popular form of transport, cost £2,000 before the crisis but now costs around £30,000.

– Lebanese are emigrating in the largest exodus since the 1975-90 civil war, which pitted Lebanon’s Christian and Muslim communities against each other and against each other. Believing that their savings are lost, many Lebanese have no intention of returning this time as they are starting over.

– Among those who leave, there are doctors. The World Health Organization said most hospitals are operating at 50% capacity, with around 40% of doctors, mostly specialists, emigrating permanently or working part-time abroad.

– Officials and the media speak of Lebanon becoming a “failed state”. Michel Aoun, the Christian president, warned in December that the state was “collapsed”. Lebanon’s Sunni religious leader said after unrest over fuel shortages in August the country risked complete collapse unless there was action.

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Written by Tom Perry; Editing by Edmund Blair

Our standards: The Thomson Reuters Trust Principles.

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