As Lebanon’s central bank teeters on the edge of bankruptcy, the spectre of hunger rises its head
Several sources say that Lebanon’s Central Bank has enough reserves for only another three months. After this, subsidies for food and other basic necessities like bread, flour, fuel, and medicine would then end. About 55 per cent of the population could become destitute with 22 per cent sliding into poverty. Just before the recent Beirut explosions the Pm and the central bank’s governor discussed the issue. Hunger haunts the country as it did a hundred years ago. AsiaNews’ ‘Help devastated Beirut’ campaign continues.
Beirut (AsiaNews) – What had been feared for months is happening; Lebanon’s Central Bank is about to declare bankruptcy.
Some trusted sources told AsiaNews yesterday that in three months the Banque du Liban’s reserves are likely to drop to US$ 17,5 billion, which it cannot spend because it is legally required to keep 15 per cent of the country's deposits in reserve.
This means that government subsidies for food and other basic items like bread, flour, fuel, and medicines will stop three months from now. Such subsidies cost US$ 700 million a month and are designed to keep prices low.
Now, financial experts and business reports in Lebanon are saying the same thing: the central bank has no more dollars. At present, it is impossible even to find Lebanese pounds. ATMs barely give out a third of the allowable amount and are often empty of cash.
Now ordinary Lebanese expect the banks, the central bank, the governor and the government are preparing to "raid depositors’ accounts,” that they are "filing for bankruptcy", that the banks “will merge into one that give shares in lieu of actual money in the accounts," shares that will be worthless in the stock exchange.
The Governor of the Central Bank Riad Salamé recently sought an emergency loan from the International Monetary Fund (IMF) equal to his country’s share, 800 million dollars, but, although possibility under the IMF constitution, the request was turned down.
If the Lebanese government withdraws all price support to basic foodstuffs, prices will jump immediately for more than half of the population who already are reduced to one meal a day, instead of the usual three.
Perhaps in the coming months it will be possible to help the poorest with coupons whilst liberalising consumer prices. However, this will turn more than 55 per cent of the population into beggars and threaten 22 per cent of the population, or 850,000 people, with poverty.
Recently, sources close to former Lebanese Prime Minister Hassan Diab (whom people are beginning to call the most honest and loyal head of government Lebanon has ever had) have revealed to the media the contents of his last conversation with Riad Salamé, on 30 July.
“Riad, we have enough reserves, right?" Diab is supposed to have said. And the governor of central bank’s answer was: "Yes, we have a margin of 2 billion (dollars)," but added “we cannot touch the compulsory reserves" (i.e. 15 per cent of the deposits that banks are required to keep in the central bank, about US$ 17,5 billion).
A few days later, the Port of Beirut was hit by two explosions. Now, with the immediate emergency over, the first shock and pain absorbed, it is back to the festering wound and the rumour mill is now saying that the Central Bank is about to run out of money.
Months ago, the world media predicted a future of hardship and hunger for Lebanon, similar to the disaster of the 1915-1918, when Turkey tried to crush the Lebanese through hunger. History will tell us once again whether hunger and death will be visited upon today's Lebanese.
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