World Bank says Lebanon’s economic depression ‘orchestrated by elite’

Gulf Today Report

Lebanon's economic depression "is orchestrated by the country's elite" and "has come to threaten the country's long-term stability and social peace," the World Bank said in a press release on Tuesday attached to its latest report on the country.

Lebanon's descent into financial ruin began in 2019, the result of a poorly managed spending binge that pushed up debt, political paralysis as rival factions squabbled and foreign lenders' reluctance to bail the country out unless it reformed.

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The World Bank ranks the crisis as among the most severe globally since the mid-19th century, devastating a country once seen as a wealthy and liberal outpost in the Middle East before civil war broke out from 1975 to 1990.

The World Bank ranks the crisis as among the most severe globally since the mid-19th century.

"Lebanon's deliberate depression is orchestrated by the country's elite that has long captured the state and lived off its economic rents," the release said citing the World Bank Lebanon Economic Monitor Fall 2021 report.

"This capture persists despite the severity of the crisis -one of the top ten, possibly top three most severe economic collapses worldwide since the 1850s; it has come to threaten the country’s long-term stability and social peace."

Lebanese government revenues fell by almost half in 2021 to reach 6.6% of its gross domestic product (GDP) marking the 3rd lowest ratio globally after Somalia and Yemen, the bank said in its press release on Tuesday.

The current government opened a preparatory dialogue with the International Monetary Fund on Monday.

Meanwhile, Lebanese officials began much-delayed talks with the International Monetary Fund Monday on support measures aimed at lifting the country out of its worst-ever economic crisis.

"We hope the negotiations will be concluded as soon as possible, but given the complexity of the issues it is possible that other rounds will be held," Deputy Prime Minister Saade Chami, who heads the Lebanese delegation, said in a statement.

The talks are taking place online due to Covid-19 restrictions.

Lebanon is hoping to obtain a financial rescue package to rekindle an economy that has been in free fall for two years.

The previous government held several rounds of talks with the multilateral lender, but was unable to secure a bailout, amid a failure by the two sides to agree on the scale of financial losses stemming from the meltdown.

The current government opened a preparatory dialogue with the IMF last year and has settled on a figure of around $69 billion as its estimate for the financial sector's losses, ahead of the talks that began on Monday.