Shaaban Bilal (Beirut, Cairo)
The World Bank called for the restructuring of the banking sector in Lebanon, amid the continued deterioration of the economic situation, while experts and analysts considered in statements to Al-Ittihad that the absence of authorities and the failure to elect a president for the country or for the government is heading the deteriorating economy towards the worst and the unknown.
The report of the Lebanese Economic Monitor, issued by the World Bank, dealt with the dispute between the main stakeholders in Lebanon over how to distribute the financial losses, which represents the main obstacle to reaching an agreement on a comprehensive reform plan to save the country.
The unprecedented political vacuum is likely to further delay reaching any agreement on resolving the crisis and approving necessary reforms, deepening the plight of the Lebanese people.
The report dealt with “recent economic developments and economic prospects and risks for Lebanon in light of the prolonged state of uncertainty, with an emphasis on the need to move forward in distributing financial losses in a more equitable manner to help put the Lebanese economy on the path of recovery.”
Since the summer of 2019, Lebanon has witnessed an accelerating economic collapse, which has reached the point where the local currency has lost its value against the dollar, and poverty has worsened until it has prolonged, according to a report by “ESCWA” 82% of the population, at a time when banks imposed measures that prevented depositors from withdrawing their money due to a scarcity. Liquidity, as a ceiling was set for financial withdrawals, especially in dollars.
The political crisis in Lebanon was reflected in the economic conditions, and cast a shadow on social life, especially after the failure to name a new president for the country, and the Prime Minister-designate Najib Mikati is still unable to form a government and runs the country through a caretaker government.
The Lebanese academic and political researcher, Dr. Bashir Esmat, considered that the vacuum has existed and continues since the parliament took over on May 15 without being able to form a government, indicating that he does not see Aoun leaving the presidential palace as an additional void except in form.
He added to Al-Ittihad that what is new and influential economically, socially, and possibly security is the approval of the budget and its entry into force, considering that the current crisis that prevents the election of a president and thus the formation of a government will not allow the completion of the budget.
The Lebanese academic classifies the risks into 7, the first of which is the complete absence of the executive authority, the Presidency of the Republic and the Council of Ministers, the referral of a large number of senior employees to retirement without the possibility of appointing a replacement for them, and the start of applying the new budget with all that it means of a double increase in employee compensation from unavailable funds. And resorting to printing it, which means more inflation and a collapse in the value of the local currency.
Esmat pointed out that the risks include the rise in food prices and the continued rise in fuel prices, with the continuation of speculation on the “lira” and trading in dollars, and thus the inability to determine an approximate price for it, in addition to the high bill of electricity, water and communications without the provision of services.
The Lebanese academic indicated that in the event that a quick constitutional solution is not achieved, Lebanon will head towards more chaos in the absence of any authority that has solutions, which threatens the collapse of the state’s structures, indicating that everyone must be aware that there is no solution but a political one whose essence is the Taif Pact.
In turn, the Lebanese political researcher Mahmoud Fakih explained that the political vacuum also affects legislative work, so there must be an executive authority represented by the president to pass laws issued by Parliament, especially those dealing with the economic crisis.
Fakih added to Al-Ittihad that the parties in power do not have any sense of responsibility that makes them care about the elections of a new president and they are waiting for an external directive through a settlement, as previous experiences have proven.
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