Lebanon’s Economic Situation- August 2023

Riad Salameh, who served as governor of Lebanon’s central bank for 27 years, resigned on July 30, 2023. Riad Salameh left scorched earth in his wake. Today, the economic situation in Lebanon is the worst it has ever been, with government and public corruption and millions of citizens whose economic circumstances are precarious and who do not receive essential state services.

Riad Salameh is sought by the European Union, the United States, the United Kingdom, and Canada for money laundering and embezzlement. Al-Hadath newspaper reported on August 23 that the Lebanese authorities had recently received the criminal audit report prepared by the consulting firm, “Alvarez & Marsal”, regarding the Lebanese Central Bank’s accounts between 2015 and 2020. The report revealed the waste and corruption at the Central Bank, as well as the violations committed in the area of expenses, as well as the absolute powers of Riad Salameh, who prevented Central Council members from participating in decision-making, manipulated figures, and distributed public funds to his associates and favored parties.

Wasim Mansouri, Salameh’s first deputy, was designated acting governor of the Central Bank. Mansouri is a Shiite from the Bekaa Valley who is affiliated with the Amal movement and its leader, Nabih Berri.

Above: Wasim Mansouri

The economic crisis worsens as the appointment of a new permanent governor of the Bank is postponed due to Lebanon’s failure to elect a president. No agreed-upon president has been elected since Michel Aoun left office in October 2022. As a result, the government’s mandated chain of appointments, which is likewise transitory, is delayed. Citizens in Lebanon have long lost faith in the central government, the monetary system, and the banks.

According to the World Food Organization, 5.7 million people live in Lebanon, with 3.1 million requiring immediate food assistance, based on tests conducted in June 2023. In Lebanon, $278 a month is required to feed a household of five. 9 out of 10 families struggle to afford essentials. 15% of Lebanese families discontinued educating their children so that they could go to work.

The Lebanese army, which was a symbol of economic stability among its servicemen, also lost its status and the erosion of its salaries is at a peak. The annual remuneration of an officer with the rank of Amid (brigadier general) was approximately six million Lebanese pounds, or roughly $4,000. Currently, the salary is equal to $500. The average pension for public sector/military/security force retirees is equivalent to $80 per month (the Lebanese pound is the eleventh weakest currency in the world). Over 80% of public employees are currently paid $110 per month.

According to the World Bank, Lebanon’s inflation rate is 350 percent and it ranks as the highest inflation rate in the world, with an annual increase of 264 percent in the rate of price increases. The sharpest increases are in Internet services which increased by 621 percent, pharmaceuticals, and health care by 374 percent, and food products by 350 percent. Since 2019, the Lebanese pound has lost 98 percent of its value.

According to the International Monetary Fund, the financial situation in Lebanon has worsened primarily because there are elements that oppose necessary reforms in the country, primarily because of the political crisis, and because it is clear to certain elements in Lebanon that their corruption and waste pipeline will be shut down.

This economic condition has an impact on all aspects of life in Lebanon. As previously said, citizens have lost faith in the banking system, there is a significant shortage of electricity, and as a result, there is a disruption in the supply of water, food products are scarce, and medicines are unavailable. Many Lebanese rely on money for their everyday livelihood donated to them as charity from family abroad.

According to data issued by the Bank of Lebanon in June 2023, the number of Lebanese remittances to the country from abroad amounted to $4.82 billion in 2022, up from $4.79 billion in 2021. 

All of this is on top of the immense burden placed on the Lebanese state by the failure to address the Syrian refugee crisis, which has cost Lebanon $27 billion over the last 11 years. Syrian refugees are a demographic time bomb in Lebanon, accounting for approximately 31% of the country’s overall population. Today, Lebanon’s annual economic cost exceeds $3 billion. Since the outbreak of the Syrian civil war, more than 190,000 babies have been born to refugee families in Lebanon.

Total Company began gas drilling in Block 9 on August 24, 2023, as part of the maritime border agreement struck with Israel in October 2022. Lebanon has great hopes for drilling findings that will provide the country with an economic future.

As we know Lebanon, government corruption and interest groups will divert and exploit drilling funds, assuming they are discovered and produced in a few years, for their own purposes rather than to help Lebanon out of its economic plight. Furthermore, the IMF’s demands will most likely be implemented only for show (if at all…), and Lebanon will succeed in channeling the required reforms only for their own interests and according to internal interest groups.

All of this without mentioning Hezbollah once…

The ongoing political crisis in Lebanon, as well as the failure to elect a president, are largely the result of Hezbollah’s demands to appoint a president to its liking, over whom it may govern as before. Furthermore, Hezbollah wants to dominate the Lebanese monetary system in order to distribute resources to the Shiite populace that backs it, install officials linked with it, and sustain its parallel economy in the “Hezbollah state” that operates in Lebanon.






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Teddy Sapir

Teddy Sapir

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