As Lebanon marks its 75 years of independence, the country’s corruption-plagued economy is on the verge of a collapse. Moreover, the political bickering is not helping. Lebanon had its first national elections in nine years six months ago, and the prime minister-designate, Saad Al-Hariri, surprisingly hasn’t formed a government. According to sources, Al-Hariri efforts to form a government has been hampered by infighting. This has no doubt left a political vacuum.
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Over the past decades, the tiny Arab country has coped with multiple political and security crises. Lebanon has suffered from neighbouring Syria’s seven-year civil war, that has brought more than a million refugees into its land, putting more pressure on its dysfunctional infrastructure. Besides, Lebanon has its own chronic problems – a debt of $84 billion and unemployment.
The World Bank sent alarm bells ringing after an official said: “that unless a government is formed soon to carry out badly needed reforms, the Lebanon we know will fizzle away.” Moreover, the country had the world’s third highest debt-to-GDP ratio, at over 150 per cent at the end of 2017. The International Monetary Fund wants to see immediate and substantial fiscal adjustment to improve debt sustainability.
At a meeting in Paris in April this year, international donors had pledged $11 billion in loans and grants. This, Lebanon risks losing if no Cabinet is in place soon. The donors had set conditions to unlock the funds and approve reforms. According to VOA, this crisis has prompted some Lebanese to change their deposits from the local currency to US dollars for fear that the Lebanese pound might collapse; this is despite the Central Bank Governor Riad Salameh assuring the markets that the local currency is stable. Due to the collapsing economy, Lebanon has had 2,200 businesses wind down.
Mounting debt and political bickering will surely take Lebanon down unless Al-Hariri takes charge and acts swiftly.