Lebanon

Lebanon’s caretaker prime minister warned Tuesday that the country is hurtling toward a “social explosion” and appealed on the international community for assistance to prevent the demise of the nation facing multiple crises, the Associated Press reported. Hassan Diab’s plea came as he spoke to diplomats in Lebanon, where politicians have failed to agree on forming a new government, nearly a year after Diab’s Cabinet resigned.
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Lebanon's banks, which once powered the economy by sucking in billions of dollars of deposits from abroad, are shedding staff, watching loan books shrink and chasing liquidity to stay afloat, Reuters reported. About 3,000 bankers, or more than 10% of the banking industry workforce, have resigned or lost their jobs so far since a financial crisis flared up in late 2019 - and the numbers keep rising, four senior bankers told Reuters. De facto capital controls are in place, depositors are locked out of most of their savings and lending to the private sector has plummeted.
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Lebanon’s currency hit a new low on Sunday, as the country’s economic and political crisis worsened with no apparent solutions in the near future, the Associated Press reported. The currency has lost more than 90% of its value since October 2019, when anti-government protests erupted. Inflation and prices of basic goods have skyrocketed in the country, which imports more than 80% of its basic goods. The U.S. dollar hit 15,300 Lebanese pounds on the black market, a level not seen since March. The official rate still stands at 1,515 pounds to the dollar.
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Lebanon scrapped a new dollar-deposit rule on Thursday that triggered minor street protests and meant savers lost the ability to change their money at a more favorable rate, Bloomberg News reported. A day after the Shura Council, the country’s top judicial body, banned a long-standing rule allowing depositors to access their dollars at a rate higher than the official currency peg, Riad Salameh, the governor of Banque du Liban, said the decision was being revoked. The rule “is still in effect,” Salameh told reporters in Beirut after meeting with the president and the head of the council.
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Lebanon’s severe economic and financial crisis is likely to rank as one of the worst the world has seen in more than 150 years, the World Bank said in a report released Tuesday, the Associated Press reported. The World Bank said that since late 2019, Lebanon has been facing compounded challenges, including its largest peace-time economic and financial crisis, the spread of coronavirus and a massive blast at Beirut’s port last year that is considered as one of the largest non-nuclear explosions in history.

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In normal times, Ziad Hassan, a grocery store manager in Beirut, would get a daily email from his chain’s management telling him which prices needed to be adjusted and by how much. But as Lebanon’s currency has collapsed, sending the economy into a tailspin, the emails have come as often as three times a day, ordering price increases across the store, the New York Times reported. “We have to change everything,” an exasperated Mr. Hassan said, adding that his employees often weren’t even able to finish marking one price increase before the next one arrived.
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Lebanon's caretaker prime minister warned Saturday that the country was quickly headed toward chaos and appealed to politicians to put aside differences in order form a new government that can attract desperately needed foreign assistance, the Associated Press reported. Hassan Diab, who resigned almost seven months ago as prime minister, threatened to suspend his caretaker duties if that would increase pressure for a new Cabinet to be formed.

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Paralysed by financial crisis and riven with political risk, a number of Lebanon’s banks are struggling to meet a central bank target to raise their capital defences by 20% by the end of this month, Reuters reported. Less than half of the country’s dozen or so large banks are expected to meet the requirement, which the central bank set in August to reinforce the sector, according to four banking sources with direct knowledge of the situation.
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Lebanon’s parliament passed a law on Monday to lift banking secrecy for one year in a move that could clear the way for a forensic audit of the central bank, a key condition for foreign aid that has hit a roadblock, Reuters reported. Such an audit is on a list of reforms that donors have demanded before helping Lebanon climb out of a financial crisis without precedent. These include steps to tackle corruption, a root cause of the meltdown that has crashed the currency and triggered a sovereign default.

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Lara Mustafa and Wassim Hachem are among thousands of university students caught up in Lebanon’s financial crisis, which started in 2019 with popular protests against leaders whom demonstrators blamed for corruption and mismanaging the economy, Reuters reported. An insolvent banking system, which had lent more than two thirds of its assets to the central bank and state, shut out all depositors from their dollar accounts, and Lebanon defaulted on its debts. The COVID-19 pandemic added to mass job losses and business collapses. Lebanon traditionally prides itself on its education system.

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