Currency Crisis Hits Lebanon

By Samantha Bader

It has been a remarkably hard year for the country of Lebanon – from the pandemic to the Beirut port explosion and a collapse of the government. Now, the situation on the ground is being made even worse by the official currency crumbling. On the unofficial market, widely considered to be a more accurate measure of the Lebanese economy, the US dollar was trading at 9,975 Lebanese pounds during the first week of March. 

This is a record low, and it has been caused by a myriad of factors. Lebanon as a country relies heavily on imports, which have shrunk due to the pandemic. Furthermore, customers who store their savings in US dollars in Lebanese banks have been unable to access that money due to a banking crisis

Lebanese citizens are being heavily affected by the contracting economy and weak currency. The minimum wage in Lebanon, which used to be valued at $450 USD per month is now worth $67 USD a month – not nearly enough for people to survive on. Jobs are disappearing, and the cost of many consumer goods, such as diapers, is shooting upwards, leaving people unable to fulfill even their basic needs. Nearly half the population now lives in poverty. 

Underscoring the financial crisis is the fact that Lebanon still does not have a functioning cabinet. After the previous Prime Minister and his government resigned after the port explosion in August, a new Prime Minister was appointed in October. However, disagreements between him and other political forces have meant that even now, in March of 2021, there is still no functioning government able to provide relief to citizens. 

Unrest has started to boil over in recent days. Citizens have taken to the street to protest the minimum wage and financial crisis, blocking roads, and burning trash cans. The main highway leading out of Beruit was obstructed as people pled for some help. 

“We can’t bear it anymore…The dollar is going up and they don’t care about us. They’re still dividing up their gains,” Rabih Khaled, who has been unemployed for months, said at one of the protests.

In order to regain some financial stability, Lebanon desperately needs an influx of foreign currency. Sadly, international donors have thus far refused to help, saying that the corruption present in the banking system is too widespread. If Lebanon introduces reforms to tackle this, donors have said that they would then provide aid. 

Right now, though, it appears to be a crisis without an end. Politicians have thus far chosen to enact no measures to stop the spiral from worsening, and with no foreign aid on the horizon, it appears that Lebanon is on its own. Long-term depression of the economy is likely, and it will have long-lasting effects on the economic state of the nation. The GDP, according to the World Bank, is expected to drop 20% in 2021. 

One hopes that Lebanon will find a way out of this spiral and move to a better future. Other countries in the region, such as Syria, are already starting to feel the effects of having a neighbor in crisis, and without careful management, this disaster could spill over into many nations. 

Photo by Maxime Guy on Unsplash

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