World Bank: Lebanon Crisis Among World's Worst Since 1850s
Lebanon's economic collapse is likely to rank among the world's worst financial crises since the mid-19th century, the World Bank said in a damning report released Tuesday.
The
report predicts that Lebanon's economy will shrink by close to 10 percent in 2021
and stresses there is "no clear turning point in the horizon".
Lebanon
defaulted on its debt last year, the currency lost around 85 percent of its
value and poverty is devastating a country once seen as a beacon of prosperity
in the region, AFP reported.
"The economic and financial crisis is likely to
rank in the top 10, possibly top 3, most severe crisis episodes globally since
the mid-nineteenth century," the report said.
The
latest World Bank Lebanon Economic Monitor report, entitled "Lebanon
Sinking: To the Top 3", said such brutal economic collapses are usually
the result of war.
The
complete meltdown of Lebanon's economy during the past 18 months is widely
blamed on corruption and mismanagement by the country's hereditary political
elite.
"Policy responses by Lebanon's leadership to these
challenges have been highly inadequate," the report says.
Lebanon's
ruling class has failed to act on the country's worst emergency in a
generation, which was compounded by the coronavirus pandemic and a devastating
explosion at Beirut port last August.
"The increasingly dire socio-economic conditions
risk systemic national failings with regional and potentially global
effects," the World Bank said.
The
International Monetary Fund has offered assistance but the country's political
barons have failed to even form a government that could deliver the reforms on
which foreign aid is conditioned.
- 'Social unrest' -
"Subject to extraordinarily high uncertainty, real
GDP is projected to contract by a further 9.5 percent in 2021," said the
World Bank, dashing any hopes of a quick recovery.
According
to the monetary institution, the economy contracted by 6.7 percent in 2019 and
20.3 percent in 2020.
The
solutions the Lebanese authorities have so far opted for to ease the financial
crisis have placed much of the burden on small depositors.
The
report warned of "potential triggers to social unrest" in a country
with a history of conflict and instability.
"The increasingly dire socio-economic conditions
risk systemic national failings with regional and potentially global
effects," it said.
The
bankrupt state is unable to settle many of its bills and Lebanon's own energy
minister, Raymond Ghajar, has warned that electricity supply was becoming
critical and that the country could be plunged into total darkness by June's
end.
"The sharp deterioration in basic services would
have long-term implications: mass migration, loss of learning, poor health
outcomes, lack of adequate safety nets, among others," the report said.
"Permanent damage to human capital would be very
hard to recover," said the World Bank Lebanon Economic Monitor, whose
previous report was entitled "The Deliberate Depression".
"Perhaps this dimension of the Lebanese crisis
makes the Lebanon episode unique compared to other global crises," it said.
Some
teachers in Lebanon are now earning the equivalent of less than $200 monthly,
doctors are increasingly looking for work abroad and many students can no
longer afford university tuition.