The Lebanese pound traded at a record-low 10,000 to the U.S. dollar on the country’s black market on 2 March, about 85 percent below its official exchange rate.
The pound has lost 20 percent of its value this year.
Food prices rose at an annual rate of 400 percent in December and 45 percent of the population lives below the poverty line, the World Bank estimates.
Protesters blocked roads and set fires in dumpsters around the country, reminiscent of anti-government demonstrations in October 2019 when thousands filled the streets to decry a regressive tax plan and a government paralyzed by gridlock and corruption, as the Trends Journal reported at the time.
The COVID pandemic “added to the prevailing frustration… plus now [people] are more desperate,” Sami Nader, director of the Levant Institute for Strategic Affairs, said in a comment quoted by the Financial Times.
The government of prime minister Hassan Diab collapsed in the aftermath, leaving his cabinet to manage the country. Since then, bailout talks with the International Monetary Fund have shut down and the country still has no plan to rescue the economy.
Lebanon defaulted on its sovereign debt a year ago and its banks are stuck in a liquidity crisis, making it virtually impossible for the nation to borrow more money.
The country’s economy shrank by 20 percent during 2020, according to the FT.
In Syria, next door to Lebanon, the currency’s value has fallen by almost a third this year, recently trading at a record low of S£3,750 to the U.S. dollar.
TREND FORECAST: To see where Lebanon is heading and what the implications will be, see our new article, “LEBANON FACES FINANCIAL MELTDOWN.”
