The World Bank issued a press release on Tuesday titled “Lebanon’s Crisis: Great Denial in the Deliberate Depression,” talking about the Lebanese economic collapse and the stance of the ruling body towards it.
It accused the officials of having “deliberately” caused the country’s depression and standing in “great denial” as the economic situation deteriorates dramatically:
“Lebanon’s deliberate depression is orchestrated by the country’s elite that has long captured the state and lived off its economic rents.”
The international financial organization pointed out how this has affected the public services, and caused mass brain drain, adding that “the poor and the middle class, who were never well served under this model in the first place, are carrying the main burden of the crisis.”
It described the collapse as being one of the top 10 most severe economic collapses worldwide since the 1850s.
“Deliberate denial during deliberate depression is creating long-lasting scars on the economy and society,” said Saroj Kumar Jha, World Bank’s Regional Director.
He reconfirmed that the World Bank is ready “to continue to support Lebanon in addressing the pressing needs of its people and challenges affecting their livelihoods”.
Per the press release, the GDP has declined by 10.5 percent in 2021, marking a 58.1 percent contraction, one of the highest among 193 countries, between 2019 ad 2021.
Government revenues have also declined in 2021 to almost half, reaching “6.6 percent of GDP, marking the 3rd lowest ratio globally after Somalia and Yemen.”
“Monetary and financial turmoil continues to drive crisis conditions, under a multiple exchange rate system which poses valuable challenges on the economy,” the World Bank stated.
“Exchange rate pass-through effects on prices have resulted in surging inflation, estimated to average 145 percent in 2021—ranking 3rd globally after Venezuela and Sudan.”
The press release ended with a set of strategies to lessen the effect of Lebanon’s economic collapse based on:
- “A new monetary policy framework that would regain confidence and stability in the exchange rate;
- Debt restructuring program that would achieve short-term fiscal space and medium-term debt sustainability;
- A comprehensive restructuring of the financial sector to regain solvency of the banking sector;
- A phased, equitable, fiscal adjustment to regain confidence in fiscal policy;
- Growth enhancing reforms;
- An enhanced social protection.”