Financial crisis & austerity: Cripples Beirut (Predictive Analysis – Risk report)
Declining financial conditions in Lebanon, many people took to the streets in Beirut and different cities with burning tires against the political leaders’ inability to make a move to unravel the economic situation. Lebanon stands with one of the highest debt ratios across the globe with $86 billion or 150% of the country’s Gross Domestic Product (GDP). The economic crisis happened because of the shortage of hard currency, which causes the nation’s currency to weaken and resulted in rapidly climbing prices. Importers complained that they buy their products from abroad paying US Dollars and when they have to sell in Lebanon, they do so in the local currency.
On 19 Jul 2019, the parliament of Lebanon passed the austerity budget which was aimed to rescue the economy and to attract international aid, Lebanon failed to attract international donors as they want to see the state implement reforms first. The declining remittances of Lebanese national working abroad have also put pressure on the Central Bank of Lebanon’s foreign currency reserves. Companies are struggling to import raw materials, forcing them to buy dollars on the black market.
As indicated by the World Bank, the key issues confronting Lebanon is the economic and social impact of the Syrian Crisis. The financial crisis is further expected to increase poverty among Lebanese citizens a well as widen income inequality. The devaluation of the currency, water rationing, and electricity cuts have called people to take to the streets. Lebanon stands on the edge of a major political crisis as use political power will not improve the financial situation, and people will continue to find ways to assert their rights and will oppose the authorities.
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