Run on the banks across Lebanon

It is not the conventional run on the banks, when depositors fear the bank is sinking and they want to withdraw the money. And the banks go bust.

In crisis-hit Lebanon, number of individuals are storming into the banks and threatening the staff, sometimes with a toy gun and at other times with a real one, in different parts of Lebanon, wanting their savings. One man has a savings of $275,000, and another $50,000.

They want their own savings back. But the banks are functioning in a crunch time and there are the crunch-time rules. People in Lebanon, not all of them, have savings in American dollars in their banks.

The Lebanese banks are telling those wanting to withdraw their savings that they must convert the American dollars into Lebanese lira before they can draw the money. And there is a restriction on how much money in Lebanese pounds they can withdraw. The problem is Lebanese lira has lost 95 per cent of its exchange value against the American dollar.

So, a person who is forced to convert his savings in American dollars into Lebanese pounds will not get anything worth his trouble.

The World Bank is saying that Lebanon is facing the worst economic crisis since the 1800s. And a UN report says that 80 per cent of the Lebanese population has fallen into poverty.

The International Monetary Fund (IMF) team is expected to visit Lebanon to work out a financial rescue package, which might not turn out to be enough for the country to tide over the crisis.

The Lebanese political deadlock continues, and there is no firm political leadership to steer the country out of the economic storm. Lebanon has been in economic trouble for two years and more, and it became worse when a underground tank near the Beirut port with 2,700 tonnes of ammonium nitrate exploded on August 4, 2020, killing 220, injuring 6000 and turning thousands homeless. It was an incident that not only caused unprecedented loss of life and property in Beirut, but it also accentuated Lebanese economic crisis. And the country has not recovered from it.

The Association of Banks have said that banks in Lebanon will remain closed for three days on Monday, Tuesday, Wednesday to check the “raids on the banks”. But the remedy lies in the Lebanese government getting its act together as it were.

One of the reasons that an economic recovery programme is not in place is that the different political parties in Lebanon – the Sunnis, the Shias and the Christian Maronites – have not been able to come together to fight the sinking economic fortunes of the country. Lebanese parliament suspended talks on the Budget because there was no agreement.

Speaker Nabih Berry set the date for the next session on September 26 by which time Prime Minister Najib Mikati will return from London after attending the funeral of Queen Elizabeth II.

An IMF team is scheduled to visit Lebanon next week. IMF spokesman Gerry Rice said on Thursday, “There’s been slow progress implementing some of the critical actions that we think are required to move forward with a programme.”

Economy Minister Amin Salam said, “I am very concerned that the IMF could not be satisfied with the numbers in the budget.” An April Staff Level Agreement (SLA) between the Lebanese government and the IMF had worked out a $3 billion rescue package, but they were conditionalities before it could go through. Both sides are aware that the conditions have not been met, and this could delay the rescue package further. Lebanon is caught between a rock and hard place.