Exacerbating crises in Lebanon

Hassan Al-Qishawi , Thursday 16 Apr 2020

The economic crunch coupled with the Covid-19 pandemic may be too much for Lebanon to bear

Exacerbating crises  in Lebanon

Six months before the beginning of the coronavirus pandemic, Lebanon had been struggling amid a financial meltdown. The country’s economic crisis had reached a peak with the slowing of flows of money from abroad, street protests against the government, the plummeting of the currency and increases in unemployment and inflation.

Then the Covid-19 pandemic hit Lebanon, adding to its woes. By 6 April, the number of cases in the country had reached 632, of whom 100 have recovered and 20 have died.

 A number of hospitals in Mount Lebanon, namely Keserwan, will begin to shut down this week due to the cabinet’s inability to pay its dues to these medical establishments, Lebanon Debate, a local news agency, reported on Monday.

“The cabinet is highly indebted to the medical sector amid a remarkable increase in the cost of operations given the hike in the price of U.S. dollar to the Lebanese pound,” parliament member Ibrahim Kanaan tweeted on Monday.

Prime Minister Hassan Diab has urged the Lebanese “to adopt all measures possible to contain the virus… People need now more than ever to be united in the face of this crisis, which Lebanon has managed to slow through a scientific strategy and pre-emptive measures.”

Lebanese Labour Minister Lamia Yammine said that “Lebanon is undergoing exceptional circumstances as a result of the economic collapse, regardless of the new realities imposed by the spread of the coronavirus.”

“The priority of the Labour Ministry is to preserve employees’ rights without harming employers. This requires social solidarity. The ministry oversees the national pension and social security funds, and we have taken measures to help companies and institutions to pay the salaries of employees, including by extending the period for social-security payments,” she said.

Imad Hoballah, the minister of industry, wrote to employers warning them that they could face sanctions including the closure of businesses if they replace Lebanese employees with workers of other nationalities in the crisis.

Hoballah said Lebanon was toiling under the pressures of economic and social crises that had led to a rapid increase in unemployment, with the pandemic now exacerbating the crisis.

“Some industrialists have laid off Lebanese workers and hired workers of other nationalities, threatening economic and social security and risking our hard-currency reserves and tax revenues, as well as impacting the consumption of local and foreign goods,” he said.

The Lebanese government has adopted a host of measures to control the spread of the coronavirus, including only allowing car owners to drive on certain days according to registration numbers. Head of public relations at the domestic security agency Joseph Mosselem said “the Interior Ministry’s decision may be followed by a decree to reduce crowding in public places.”

“The regulations that now allow private vehicles to transport family members only” must be followed, Mosselem said. “Cars shouldn’t carry more than three people, who should be wearing masks to ensure the safety of all,” he added.

Two weeks after the restrictions on movement in Lebanon were introduced, frustration is growing. One taxi driver set fire to his vehicle when he was fined for violating the regulations. A hairdresser who went out of business offered the sale of a kidney. Protests have erupted in northern Tripoli and the Bekaa Valley due to the increasingly difficult living conditions.

Lebanon is also having difficulty meeting its debt repayments. The country defaulted on its Eurobond debt due in March, and its already significant debts mean that it will not be able to spend more to help the poor.

The accelerating deterioration that has been going on for months as a result of unemployment, the dollar crunch, the plummeting in value of the national currency, and rising prices have led inflation to soar. According to the latest figures, inflation in Lebanon has jumped from 2.9 per cent in 2019 to 27.1 per cent today.

Economic experts said the unprecedented inflation was the result of the appreciation of the US dollar against the national currency in parallel markets, which was the price used to import primary staples from abroad.

Declining foreign reserves at Lebanon’s Central Bank had meant the country had not been able to pay many of its domestic and foreign debts, they said.

Meanwhile, the Lebanese people feel helpless amid these ramifying crises. The banks are no longer allowing withdrawals to be made in dollars amid skyrocketing prices and weakening purchasing power.

Some food staples have increased in price by up to 50 per cent, and this had led to significant distress to many after the devaluation of the national currency by up to 40 per cent against the dollar.

Before the spread of the coronavirus, the World Bank had forecast that 40 per cent of the Lebanese people would be officially poor by the end of 2020. Today, Lebanon’s Minister of the Economy Raoul Neama expects the situation to be worse.

The spread of the Covid-19 coronavirus will accelerate the trend, and more than 40 per cent of the country’s population will likely suffer from poverty by the end of the year. “I am worried, but unfortunately our hands are tied,” Neama said, adding that many people who had just about been able to make ends meet had now almost entirely lost their income.

In response, the government has said it will give the poorest segments of the population a cash grant of 400,000 lira, about $150 according to the dollar’s price on the parallel market.

Lebanon is also working on developing a programme with the World Bank estimated to be worth $450 million to support the country’s poor. The programme was scheduled to begin in September, but it will now be introduced sooner.

A report from the US human-rights organisation Human Rights Watch (HRW) said that Lebanon’s economic crisis had affected the country’s hospitals, which no longer had the foreign currency necessary to buy medical equipment.

The shortage of dollars and Lebanon’s economic crisis have also taken their toll on foreigners working in Lebanon, who are finding it increasingly difficult to cash their pay cheques in dollars and consequently are unable to send money to their families abroad.

More than 280,000 foreign workers from Asian and African countries work in Lebanon, and many of them are considering returning to their homelands. Hundreds of Bangladeshi workers have already converged on their embassy in Beirut to prepare their papers to leave the country.

 

*A version of this article appears in print in the  16 April, 2020 edition of Al-Ahram Weekly

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