Lebanon's economic depression "orchestrated by elite", World Bank says

Lebanon's economic depression "is orchestrated by the country's elite" and "has come to threaten the country's long-term stability and social peace," the World Bank said in a press release on Tuesday attached to its latest report on the country.

Lebanon's descent into financial ruin began in 2019, the result of a poorly managed spending binge that pushed up debt, political paralysis as rival factions squabbled and foreign lenders' reluctance to bail the country out unless it reformed. The World Bank ranks the crisis as among the most severe globally since the mid-19th century, devastating a country once seen as a wealthy and liberal outpost in the Middle East before civil war broke out from 1975 to 1990.

"Lebanon's deliberate depression is orchestrated by the country's elite that has long captured the state and lived off its economic rents," the release said citing the World Bank Lebanon Economic Monitor Fall 2021 report.

"This capture persists despite the severity of the crisis - one of the top ten, possibly top three most severe economic collapses worldwide since the 1850s; it has come to threaten the country’s long-term stability and social peace." Lebanese government revenues fell by almost half in 2021 to reach 6.6% of its gross domestic product (GDP) marking the 3rd lowest ratio globally after Somalia and Yemen, the bank said in its press release on Tuesday.

Real GDP is estimated to have declined by 10.5%, according to the World Bank Lebanon Economic Monitor, while gross debt is estimated to have reached 183% percent of GDP in 2021, a ratio only exceeded by by Japan, Sudan and Greece, the release said.

"Deliberate denial during deliberate depression is creating long-lasting scars on the economy and society," said Saroj Kumar Jha, World Bank Mashreq Regional Director.

"Over two years into the financial crisis, Lebanon has yet to identify, least of all embark upon, a credible path toward economic and financial recovery," he added.

(Reuters)