The middle eastern country has been in the spotlight ever since the tragic Beirut explosion in 2020. Some have said that it is a result of the current government's inability to properly govern the country. Unfortunately, the problems go deeper as the economic situation in Lebanon has become dire as shortages of goods have become more common.
To make matters worse, their currency has taken a historic tumble as it surpasses Venezuela in rate of inflation. Now, the Lebanese currency is losing value at a rapid pace making it harder to buy the already scarce goods. The currency crisis can be derived from the choice of pegging their currency to the US dollar. It brought confidence to investors early on but unsustainable as they had to borrow money to maintain the exchange rate of their weaker currency.
Ultimately, it is the responsibility of the government to properly take action. But the many crises converging will make it difficult for any politician to stop Lebanon from spiraling out of control.
Credit: https://www.npr.org/2021/09/28/1041334763/how-whatsapp-broke-lebanon
3 comments:
If this crisis started before Covid then they really are in a lot of trouble. I don't think there is an end in sight anytime soon with the supply chains in a bad spot. I think the best place to start is to un peg their currency from the U.S dollar.
Unfortunately, there is more bad news to this struggling economy. On Oct.9th, the country was reported to have disconnected from its grid due to fuel depletion. Lebanon's state electricity company has been supplying as little as two hours of power a day since July.
If Lebanon had more experienced and educated rulers, it would have fewer economic problems. One of the biggest issues is corruption. In 2020, Lebanon was ranked 149 out of 180 countries in the Corruption Perceptions Index. It is sad to read that, nowadays, some countries experience such problems. My advice would be to hire experts in the economic department as Brazil when they had hyperinflation.
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