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Wednesday, 23 September 2020

Lebanon, mired in economic crisis

AFP , Monday 3 Aug 2020
A man jogs near a cordoned off area which is almost empty of residents and tourists, officially closed following the government's measures to help stop the spread of the coronavirus, in Beirut, Lebanon, Monday, Aug. 3, 2020. AP
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Lebanon is suffering its worst economic crisis in decades, marked by an unprecedented plunge of its currency, which has left nearly half of the population in poverty.

The financial collapse has led to mass layoffs and salary cuts in a country already rocked since late 2019 by mass protests against a political system seen as corrupt and incompetent.

Here are the key moments in the spiralling crisis.

- Dollar shortages -
Anxiety about a dollar shortage flares on September 29 last year when hundreds of people take to the streets of central Beirut to protest economic hardship.

Among the worst hit are petrol station owners who need dollars to pay fuel suppliers. Media report that banks and exchange offices are limiting dollar sales for fear of running out.

- Tax on WhatsApp -
A government proposal to tax free online messaging apps such as WhatsApp, made on October 17, is the last straw.

Thousands take to the streets in Beirut and other cities, some chanting "the people demand the fall of the regime".

The government of prime minister Saad Hariri scraps the tax the same day, but protests grow over the next weeks, culminating in demonstrations gathering hundreds of thousands demanding an overhaul of the entire ruling class.

- New government -
On December 19 little-known academic Hassan Diab, who is backed by powerful Shiite movement Hezbollah, is named prime minister, replacing Hariri who resigned in late October under pressure from the street.

Protesters immediately regroup to condemn the appointment which outrages members of the Sunni community.

On January 21, 2020, a new government is unveiled, made up of a single political camp, the pro-Iranian Hezbollah and its allies, who have a parliamentary majority.

Demonstrators respond by torching tyres and blocking several roads in mainly Sunni towns across the country.

- Default -
On March 7, Lebanon, whose debt burden has ballooned to nearly 170 percent of its gross domestic product, says it will default on a $1.2-billion Eurobond.

On March 23 it says it will discontinue payments on all dollar-denominated Eurobonds.

- Capital flight -
On April 24, Diab says that banks have lost $5.7 billion (4.8 billion euros) in January and February in spite of restrictions on withdrawals and transfers abroad.

According to official estimates, $2.3 billion were transferred out of the country last year.

- Rescue plan -
On April 30, after three nights of violent clashes in Tripoli, Diab says Lebanon will seek help from the International Monetary Fund, after the government approves a plan to rescue the economy.

On May 13, Lebanon launches talks with the IMF.

- Arrests -
In May the president of the exchange offices' trades union Mahmud Mrad is arrested and the director of monetary operations at the central bank Mazen Hamdan charged with "manipulation of the national currency".

- Currency collapse -
From June 11-13, after the Lebanese pound hits a new low on the black market, protesters take to the streets after sundown, blocking roads, including in Beirut and Tripoli.

On June 29, the director general of the finance ministry involved in the negotiations with the IMF resigns, citing deep disagreements over the management of the crisis.

- Out of control -
On July 10, the UN rights chief Michelle Bachelet warns that Lebanon's crisis is getting out of hand, calling for urgent internal reforms coupled with international support to prevent further mayhem.

- 'Failed state' -
On August 3, Foreign Minister Nassif Hitti resigns in protest at the government's mishandling of the crisis, including its unwillingness to initiate changes demanded by the IMF.

He warns that Lebanon risks becoming a "failed state".

He is replaced by Charbel Wahbe, a former ambassador and advisor to President Michel Aoun.

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