Lebanon: the country needs “six to seven years” to get out of the crisis, says the president

Published on : 12/25/2021 – 09:35

Lebanese President Michel Aoun said Friday, December 24, that Lebanon would need “six to seven years” to emerge from the crisis.

Lebanon has been going through an unprecedented economic crisis since 2019, one of the worst in the history of the world since 1850, according to the World Bank. In the country, where the minimum wage does not exceed 25 dollars on the black market, four Lebanese in five are considered poor, according to the United Nations.

In an interview with AFP on Tuesday, the governor of the Central Bank of Lebanon, Riad Salamé, estimated that Lebanon needed $ 12 billion to $ 15 billion to revive its economy.

“Lebanon’s quota in the International Monetary Fund (IMF) is $ 4 billion”, but other countries or financial institutions could help help Lebanon reach the sum of “$ 12 billion to $ 15 billion” necessary to “revive its economy”, he explained in particular.

In November, the Lebanese government resumed discussions with the International Monetary Fund (IMF), but has not yet started the reforms requested by the international community to come to the aid of Lebanon.

30,000 Lebanese pounds for one dollar

Heavily indebted, Lebanon announced in March 2020 the first default in its history. Since then, Lebanon’s foreign exchange reserve requirements have fallen to $ 12.5 billion, a drop of more than 50% since the onset of the economic crisis in 2019.

“The required reserves today reach about 12.5 billion dollars” (about 11.06 billion euros), declared Tuesday Riad Salamé, who specified that this institution was able to maintain the system of subsidies for “six at nine additional months.

After fully lifting fuel subsidies, the authorities are gradually reducing subsidies on drugs and flour, while the Lebanese pound has lost 90% of its value on the black market.

Officially fixed since 1997 at the rate of 1,507 pounds to the dollar, the national currency hit a record exchange rate of around 30,000 pounds to the dollar in December on the black market.

Although it has helped the country maintain a “good socio-economic situation for 27 years, this rate is no longer realistic,” said Riad Salamé.

Lebanon began in May 2020 the first negotiations with the IMF which ended up derailing two months later. These discussions are still at the stage of diagnosing the financial situation, said Riad Salamé: “Lebanon has not yet presented a plan to the IMF”.

With AFP and Reuters