The economic crisis in Lebanon has caused the value of the Lebanese pound to plummet to a historic low against the US dollar on the parallel market. The official exchange rate is 15,000 pounds to the dollar, but on Tuesday, the rate was 100,000 pounds to the dollar. This is a significant drop from 1,507 pounds to the dollar before the crisis began in 2019. The currency’s value was at about 60,000 pounds to the dollar in late January. The political elite, who are widely blamed for the country’s financial collapse, have failed to stop the currency’s free fall.
The crisis has plunged much of the population into poverty, and Lebanese banks have imposed draconian withdrawal restrictions, essentially locking depositors out of their life savings. The Association of Banks in Lebanon has described the judicial measures against lenders as “arbitrary” after depositors filed lawsuits to retrieve savings. In response to the lawsuits, some judges sought to seize the funds of bank directors or board members or to force lenders to pay out customers’ dollar deposits in pounds at the old 1,507 exchange rate.
Lebanese banks were closed on Tuesday as they resumed an open-ended strike that began early last month to protest against the judicial measures. Customers had a two-week reprieve from the strike after caretaker Prime Minister Najib Mikati intervened late last month to impede the work of one of the judges investigating banks. Over the past three years, bank withdrawal limits have sparked public outrage that has seen some Lebanese resort to armed hold-ups in a bid to lay hands on their own money.
The political inaction and lack of accountability have been a hallmark of the Lebanese economic crisis. Officials have failed to enact any of the reforms demanded by international creditors in return for unlocking billions of dollars in emergency loans. In April last year, the International Monetary Fund announced an agreement in principle to provide Beirut with $3bn in loans spread over four years – conditional on a package of sweeping reforms.
Lebanon is facing the economic meltdown largely leaderless, as divided politicians have failed to elect a new president for months – in a country already governed by a caretaker cabinet with limited powers. Lebanon has had no president since Michel Aoun’s term ended in October. Repeated sessions of parliament convened to elect a successor have all failed to reach an agreement on a consensus candidate.
The economic crisis has caused significant damage to Lebanon’s infrastructure and has led to widespread power cuts and shortages of basic goods. The World Bank estimates that more than half of Lebanon’s population is now living below the poverty line. The crisis has also led to an increase in crime rates and social unrest. In mid-February, dozens of angry demonstrators attacked several banks in Beirut after the pound sunk to about 80,000 against the greenback.
In conclusion, the economic crisis in Lebanon has caused significant damage to the country’s economy and has plunged much of the population into poverty. The political elite’s failure to enact reforms and stop the currency’s free fall has worsened the situation. The lack of accountability and leadership has also contributed to social unrest and an increase in crime rates. It remains to be seen how Lebanon will recover from this crisis and whether its leaders will take action to prevent a similar situation from happening again in the future.