The Lebanese crisis among the worst since the mid-19th century, according to the World Bank


Lebanon’s economic crisis, the worst the country has seen in three decades, is expected to be among the top 10 global crises – perhaps even the first three – since the mid-19th century, according to the World Bank.

The extent of the economic depression has “no clear turning point” on the horizon, given “disastrous” and deliberate political inaction, the Washington lender said. report. Lebanon’s gross domestic product plunged to around $ 33 billion in 2020, from nearly $ 55 billion in 2018.

Gross domestic product fell to around $ 33 billion last year, from around $ 55 billion in 2018.

“Such a brutal and rapid contraction is usually associated with conflict or war. Even before, the World Bank has long identified Lebanon as a state of fragility, conflict and violence, and as such dire socio-economic conditions risk systemic national failures with regional and potentially global consequences, ”he said. declared the lender.

The already dire social effects of the crisis could quickly turn catastrophic, with more than half of the population likely below the national poverty line, the lender said in its Spring 2021 Lebanon Economic Monitor.

Telephone surveys conducted late last year by the World Food Program found that 41% of households reported difficulty ensuring access to food and other basic needs, the World Bank said. .

The share of households that experienced difficulty accessing health care rose to 36% between November and December, compared to 25% between July and August.

Unemployment among those polled rose to around 40 percent from November to December, from 28 percent in February.

A report from the lender last year said the country was in a “deliberate depression” due to political paralysis and the failure of policymakers to reach agreement on a new government and the necessary reforms that could unblock it. billions of dollars in aid from the International. Monetary Fund and International Donors.

Lebanon is in the throes of its greatest peacetime economic and financial crisis, made worse by the Covid-19 pandemic, the Beirut port explosion and inadequate political responses amid more than a year of political struggle internal.

The economy shrank 20.3% last year, after contracting 6.7% the year before, according to the lender.

Lebanon’s contraction in real GDP per capita is already worse than any top-to-bottom change in the G8. According to the bank, the country’s debt-to-GDP ratio reached 174% last year.


The Lebanese pound has plunged more than 80 percent against the US dollar on the black market, and inflation hit 158 ​​percent in March of this year.

A standoff over cabinet formation since October over disagreements over the number of ministers, portfolio allocation and veto power under the country’s sectarian power-sharing system has also raised the specter of violence.

Lebanon has experienced three notable periods of civil war in its history – the first dating back to the 1860s, the second in the 1950s, and the third, which began in 1975 and lasted 15 years.

The economic crisis “has exacerbated long-term national deficiencies, including institutional weaknesses, failed economic and social policies and dismal public service delivery. In such an environment, there is a growing weariness of triggers for social unrest, ”said the lender.

The World Bank said the country’s foreign exchange subsidy for imports of essential and essential goods presents serious political and social challenges, as the most vulnerable households are exposed to declining purchasing power.

The crisis is affecting public services such as electricity and water supply, sanitation and education. Rising poverty levels have resulted in an increase in the number of people dependent on public services, threatening Lebanon’s financial viability and functioning capacity due to higher costs and lower incomes, the bank said.

The shortage of liquidity and the lack of foreign exchange could lead to the termination of private sector contracts for the maintenance of power plants and the temporary production of electricity, he said.

The electricity company Électricité du Liban, which costs the government $ 2 billion a year, is expected to increase the number of power cuts to manage its cash flow, the World Bank said.

Due to the reduction in the water supply to the country’s utilities last year, people have had to resort to more expensive and less convenient alternatives such as tankers and bottled water, which prices have increased, he said.

“The breakdown of sanitation services risks intensifying the spread of water-borne diseases,” negatively affecting an already vulnerable public health system, the bank said.

Worsened crises have put the country’s education sector under strain, and rising poverty rates are forcing students to drop out of private schools and enroll in public schools.

About 54,000 students, or 11% of public sector students, left the education system this year, the bank said. Most come from the most marginalized households.

In December, the Institute of International Finance said the introduction of real reforms was pushing the country’s economic trajectory towards that of a “failed state.”


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