The World Bank: Lebanon’s financial losses equal to 3 times its GDP | Economy

The World Bank Group said the financial losses suffered by the Lebanese economy and its public finances are equivalent to 3 times GDP for the year 2021.

The bank said in a report released on Wednesday that the country’s total financial losses amount to $72 billion, calling for the need to restructure the local banking sector.

Lebanon is looking for solutions to get out of the tunnel of its financial, economic and monetary crisis, including knocking on the door of the International Monetary Fund to obtain a financial loan and the possibility of floating the local currency.

However, the World Bank believes that it is too late, as regards the hypothesis of fluctuation of the financial sector, due to the lack of sufficient public funds for this, especially since the state assets amount to only a small part of these losses.

He added, “Lebanon is experiencing one of the most severe crises in the world today. We expect the local economy to contract by 5.4%, assuming current scenarios remain unchanged until the end of the year.”

“The unprecedented political vacuum is likely to further delay reaching any agreement on resolving the crisis and passing necessary reforms, which aggravates the plight of the Lebanese people,” he said.

serious economic crisis

Earlier today, the head of the Lebanese interim government, Najib Mikati, said that the current economic and monetary crisis will not find a way out, without the approval of the final agreement with the International Monetary Fund.

And at the end of January 2022, the Lebanese government officially started negotiations with the International Monetary Fund on a program for the country’s economic recovery.

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Mikati said the bitter Lebanese economic reality and the enormity of the financial crisis testify to the need and importance of developing an integrated strategy and blueprint to adopt structural reforms.

He said: “We are convinced that there is no way out of the current economic and monetary crisis, without approving the final agreement with the IMF, so as to guarantee the flow of foreign currency income to Lebanon.”

He believed that donor countries would not have reached out if there was no international observer for reforms, namely the International Monetary Fund.

Beirut is trying to reach an aid program with the fund, to get out of a serious economic and financial crisis that has afflicted the country since the end of 2019, which has led to a record deterioration in the value of the Lebanese pound against the dollar.

Today, the Lebanese banking sector is suffering from a serious and dangerous crisis, for which all political and monetary authorities must unite their efforts to contain the existing imbalances and move the sector forward towards recovery.

The Lebanese economy has shrunk by more than 40% since 2018, at a time when inflation is in the 3-digit number, while foreign exchange reserves are declining and the parallel exchange rate has reached £40,000 per dollar.

The Lebanese parliament has not yet been able to elect a president to succeed Michel Aoun, whose mandate expired on October 31.

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