The Financial Anxiety in Lebanon
Frederic Nassif, 20152088
Instructor, Dr. Zoya Awky
Table of content
2. Financial crisis at the central bank of Lebanon
3. The Wages in Lebanon
4. Hezbollah’s part in the crisis
5. Investments being made in Lebanon and there outcomes
The financial anxiety in Lebanon can be described in two words, “financial bankruptcy”. People around the world may not have a single clue about this issue as it mostly effects locals and citizens living abroad in some way. The explanation for Lebanon’s financial issues will be explained from all angels, as it there is more than one side to the story many factors have forced Lebanon into this situation. Many of the tourists in Lebanon are blind to this issue as they only come for a week or two, and only see the glamour that Lebanon has to offer from the sites to the luxurious hotels. Ignoring the fact that Lebanon has its fair share of poverty rates and may indeed be in a crisis. Internationally Lebanon is well known for its war crisis with its next door neighbor Syria, but not many people talk about the after affect of the war on prices, jobs and many changes that occurred to the country. Discussing also the jobs and employment in Lebanon as it has a huge effect on the finances in Lebanon and the reason most Lebanese people end up being employed outside of their own country. The future Lebanon has in stored for itself can be very catastrophic and may as well not exist. The future generations to come will have no place to call home and will be born in to a world of poverty and depression. Lebanon was once know as a country of culture and history, Many people were involved in the making of this beautiful country and it’s a shame for this issue to be the reason for its downfall. For the past century the amount of expenses Lebanon has had were never equal to the money it was spending, as currently judging by the fact that Lebanon has been in dept for the past couple of years from outside countries trying to aid Lebanon in any way possible. Lebanon’s issue has always been the oil imports, the electric power plants and the water systems as many regions in Lebanon don’t have full access to these resources and the main reason was the financing of Lebanon in which no income was left to spend on fixing any of these issues. Most of the money Lebanon has spent over the years were on imported products and services as a result of spending the money they had outside their very own country caused Lebanon to be in this situation, this also goes for average citizens that spend their wages on international products instead of investing locally. Most of the blame can be put on the government for not providing most of the resources in which citizens spend their money on. Lebanon has a way of avoiding this tragedy and there are many that can aid in this issue.
Central of bank of Lebanon
Lebanon’s central bank governor Riad Salamé Stated “We are not a normal country”. In the disturbance that has assail Lebanon all through its ongoing history, there has been one consistent: Riad Salamé has filled in as legislative head of the Banque du Liban, the national bank, since 1993, when the nation was all the while reeling from its 15-year common war. The most recent emergency for Mr. Salamé broke on November 4, when Saad al-Hariri, the executive, stunned his nation by declaring his acquiescence on a Saudi-claimed news channel, from Riyadh. The episode denoted the most recent acceleration in strains between Saudi Arabia and Iran, reflecting expanding Saudi alert at the impact in Lebanon’s administration of Hezbollah.
Lebanon’s war ended twenty seven years ago however the country has not been stable in political or security terms since then. Mr. Salamé same the war in neighboring Syrian Arab Republic had value the Lebanese economy $14bn since it started in 2011. consistent with the International fund, Lebanon’s economy grew at a median annual rate of nine.2 per cent within the four years before the conflict. From 2011 to 2014, it averaged a pair of.1 per cent, and 0.9 per cent from 2015 to 2016.”We already had severe issues,” Mr. Salamé told delegates at the foot event. “We want additional growth. Our fiscal and external deficits square measure there. it’s not as if we tend to had a functioning project and it absolutely was interrupted.” He added, however, that “past crises have exposed our banking sector to measure stress tests, not theoretical ones. Our system has tested resilient and can do therefore once more”. One take a look at was the assassination, in 2005, of Rafiq al-Hariri, Saad al-Hariri’s father, United Nations agency had been prime minister for a complete of ten years between 1992 and 2004. The killing sparked a preferred insurrection that eventually semiconductor diode to the withdrawal of Syrian troops from Lebanon.”The system was liquid. it absolutely was able to satisfy all requests and that we resumed our upward trend,” Mr. Salamé same. But maintaining the dollar peg, command at regarding 1.500 Lebanese pounds for nearly twenty years, is crucial to the country’s stability, he says.
This effort needs keeping open channels between Lebanese banks and their foreign counterparts that permit dollar deposits to come back into the country. Mr. Salamé says his money engineering helped raise total inflows to $15bn. however United States of America lawmakers square measure considering a bill that raises the chance of any sanctions against Hezbollah, that may conjointly limit inflows. In the days when Mr. Hariri’s resignation, Thamer al-Sabhan, Riyadh’s minister of Gulf affairs, warned that Lebanon would be thought-about to possess declared war on Asian country for “remaining underneath this party of evil and terrorism” — a regard to Hezbollah Depending on however strictly President Trump’s administration interprets the planned United States of America legislation, it may target those within the Lebanese government seen as politically near to Hezbollah. Central bank officers say they need received non-public assurances that this might not happen, however President Trump has been essential of Iran and has enraptured the United States of America nearer to Asian country. He could also be minded to accept as true with Saudi assessments of capital of Lebanon. Mr. Salamé insists that the financial organization has “the disposition and also the ability to take care of stability”.
The Wages in Lebanon
The Minimum wage in Lebanese Republic was enhanced 3 years ago from five 500,000 ($330) to 675,000 ($450), nevertheless a great deal of individuals here still suppose it’s not enough which it ought to be drastically enhanced. There’s little question that you just will barely stick out $450 in Lebanese Republic given however expensive things square measure currently, however that’s not a reason to extend the remuneration as this might cause serious economic issues (there square measure different ways in which to enhance living standards). however I used to be reading yesterday a chart printed by the OECD, Organization For Economic Cooperation and Development, showing the minimum wages in thirty four completely different countries and that I thought it might be a pleasant plan to examine wherever Lebanese Republic stands on it chart. Since the chart is showing the price per hour once taxes, we’d like to figure the price of one operating hour in Lebanese Republic consistent with the Labor Law.
the remuneration is currently 657,000 LL or $450 and the majority work five days every week and eight hours each day, that amounts to 168 hours . If we tend to take Saturdays into thought the overall range of hours would be 188, therefore the price of one operating hour is between $2.4 and $2.7. this suggests that Lebanese Republic ranks somewhere within the bottom between European nation and Baltic State. Australia associate degreed Luxembourg high the list with wages over $9 an hour every, whereas the North American nation stands in eleventh position with $7.25 per hour. As so much as Arab countries square measure involved, there’s no knowledge out there for Qatar, UAE, Saudi Arabia’s remuneration is of $720 per month for the general public sector whereas it’s $268 per month in Jordan, $175 in Egypt and between $176–$266 in Syria
Less than a year ago, LBC shared a report stating that 25% of Lebanon’s labor force is unemployed and that the unemployment affects primarily the young people and those freshly graduated from university, and reaching an average of 40%. Funnily enough, the official rate announced is only 10%.
Many are blaming foreign (mainly Syrian) competition for this increase in unemployment but the deteriorating economy and the mismanagement of the Syrian crisis (among other things) by the Lebanese authorities are mainly leading to an increase in cyclical unemployment. Lebanon has a debt-to-GDP ratio of about 156 percent, one of the highest in the world, and has endured years of weak economic growth since the start of the war in Syria in 2011.
Hezbollah part in the crisis
Despite its political woes, Asian country has remained comparatively stable considering the war being waged in neighboring Syria. It is no interloper to narrowness, however, being the pay attention of a state of war between Israel and Shia-dominated Iran, that is wide seen because the supply of funding and ideological support for Islamic Jihad, a robust Muhammadan militant Associate in Nursing political cluster that was created within the mid-1980s to counter an Israeli invasion of South Asian country. Labeled as a foreign terrorist organization by the U.S. and Israel (which, last, fought a brief war against Islamic Jihad in 2006 before a United Nations-brokered ceasefire went into effect), Islamic Jihad remains opposition Israel and has immersed its destruction. Hezbollah is commonly seen as a “state among a state” in Asian country Associate in Nursing remains popular the country’s Shiah Islam community despite its destabilizing impact on an already disjointed political scene. In Dec, the U.S. passed a law that threatens to sanction anyone who finances Islamic Jihad. The act has caused tensions between Islamic Jihad and also the financial organization to rise, Reuters reportable in might, however Salameh appeared sanguine and aforesaid that the financial organization was operating to implement the law. He aforesaid that one hundred Hezbollah-related accounts had already been frozen”.
Investments made in Lebanon
Investors in Lebanon are going through their own crisis at the moment, as when wanting to invest in businesses and other profitable organizations. The financial crisis is harming that sector as there is no return to any investment being made, For example a business man invested in a construction site that was building apartments and so far The building was fully furnished in 2014 and now it’s 2018 and still no apartment was rented out or sold to anyone because of how expensive it is and how unwell the country is doing financially. Therefore many businesses that open up recently end going bankrupt as in lebanon business loyalty is a huge factor in Lebanon, since most of the people that know each other practically do not spend their money in unknown shops or expensive places in order to save money for other expenses.
Lebanon being a home for most people and being a country full of culture and rituals, was treated very poorly and the circumstances it went through never made it easy on its people and harmed it more than helped it. In time Lebanon will find a way to put all of this behind it and build a more safer future for its youth and make itself a stronger country both economically and financially. Many people see Lebanon as the heart of the middle east for its culture and the way its organized and believe me no one in this day and age would enjoy seeing such a beautiful country crumble to pieces.
1.Erika Solomon and Jonathan Wheatley Lebanon’s central bank governor: ‘We’re not a normal country” NOVEMBER 21, 2017, https://www.ft.com/content/cf667768-c0bd-11e7-b8a3-38a6e068f464
2. Najib, Mar 30, 2018,http://blogbaladi.com/unemployment-rate-in-lebanon-at-46/
3. Jad Chaaban and Navtej Dhillon, Monday, May 4, 2009, https://www.brookings.edu/on-the-record/global-economic-crisis-prosperity-and-politics-in-lebanon/