Explosion in Lebanon (Explosion photo in Lebanon)
Lebanon, formerly known as “Switzerland of the Middle East”, has been declared bankrupt today. Deputy Prime Minister Saada a-Shami also declared the central bank bankrupt, but the bank’s governor, Riyadh Salameh, denied that the bank headed by him had gone bankrupt. Salameh’s statement said: “What is being circulated about the bankruptcy of the central bank is not true.” He added that the bank is still fulfilling its legal obligations under section 70 of the Money and Credit Act, which stipulates that the bank has confidence in maintaining the integrity of the Lebanese currency and maintaining economic stability.
The economic collapse of Lebanon, which began in October 2019, was the culmination of the post-war era in the country. Hezbollah militia leaders have seized political leadership and have been in power ever since. The economy under their management sometimes flourished, but in fact was a rampant scam under mismanagement.
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The collapse was ultimately inevitable, in what the World Bank calls one of the most severe economic and financial crises in the world in modern times. Deputy Prime Minister al-Shami said that “the state of the country can not be ignored,” and from this they concluded that cash withdrawals would not be open to all citizens. “I wish we were in a normal situation,” he added.
The Lebanese currency has lost 90% of its value, eroding the ability of people to purchase basic goods, including food, water, health care and education. These troubles came in addition to frequent power outages, and fuel shortages. Also, money was lost from its purchasing power, and prices soared in a country where almost everything is imported.
The crisis worsened following the corona plague and the massive explosion in the port of Beirut in August 2020, which killed 216 people, injured thousands and destroyed parts of the capital. As mentioned, while the economic system has collapsed, it is not the political one. The same leadership that held power in power did almost nothing to address the crisis. By refusing basic reforms, they have not made progress in talks with the International Monetary Fund (IMF), and the result is that today about 82% of the population lives in poverty, according to the UN, and the unemployment rate is estimated at 40%.
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