2021…dramatic developments that may escalate in 2022

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The year 2021, which was described as the worst economically, financially and in terms of living, is absent, without a glimmer of hope for the start of a new and better year, as the country, which has been suffering from a terminal illness and has been dying for two years, those responsible for it did not decide after starting to treat it effectively and seriously, which indicates a further deterioration of its condition in 2022. If he does not insist on expediting the implementation of the required reforms, and putting the country on the path of recovery.
Since the outbreak of the financial crisis in 2019, the Lebanese have thought that 2020 is the worst year they have experienced economically, financially, and living. The year 2021 has come to deepen and exacerbate the crisis, putting 80% of the Lebanese in poverty, and losing more than 90% of their purchasing power with the deterioration of their purchasing power. The value of their salaries and wages. The World Bank considered that the crisis in Lebanon is one of the three worst economic crises in the world since 1850, but this matter did not motivate politicians and decision-makers to launch serious reform, but rather continued to disrupt, not caring about the deterioration of the economic and living situation, to be absent in 2021 without any signs On the launch of the path of recovery and reform, the pessimism rates will rise with an even greater deterioration in 2022.
What are the most prominent events that drew the year 2021 on the economic, financial and living levels?

The year 2021 began with the lira continuing its collapse against the dollar, so that the exchange rate in January 2021 reached about 8,500 pounds against the dollar, and the year ends at the limits of 28 thousand pounds, and within two years, the lira has lost more than 90 percent of its value against the dollar, and it has become about 80 percent of the population is below the poverty line. At the same time, no agreement was reached on raising the minimum wage, which is now equivalent to about $25, or to correct wages. Rather, the matter was limited to raising the transportation allowance, school grants, and monthly social assistance for public and private sector employees, noting that this decision was not applied in all cases. Private sector institutions, and the salaries of a large segment of the Lebanese still range between one and a half million and two million pounds.

With the bankruptcy and closure of hundreds of private sector institutions and the layoff of thousands of employees, the value of the gross domestic product (GDP) decreased, according to World Bank estimates, from about $55 billion in 2018 to about $20.5 billion in 2021. While the economic sectors, most notably the medical and educational sector, witnessed The emigration of thousands of employees, as Lebanon recorded during the year 2021 a significant increase in immigration rates, with the number of immigrants reaching the threshold of 100,000 citizens, according to what was monitored by “Information International,” in addition to a significant increase in unemployment rates, which reached the 41 percent threshold in 2021.
The year 2021 also witnessed the complete lifting of subsidies on fuels such as diesel and gas, as the price of a diesel fuel tank increased from about 20 thousand pounds at the beginning of the year to 336 thousand pounds at the end, and the price of a bottle of domestic gas also increased from about 24 thousand pounds to about 300 thousand pounds with The end of 2021. As for gasoline, which remained subsidized on the exchange rate of the exchange platform at the current rate of 85 percent, the price of its canister increased from about 30 thousand pounds to 335,000 pounds.

Subsidies were also lifted in the year 2021 for medicines whose prices soared to millions of pounds for medicines for chronic and incurable diseases, and became beyond the capacity of the majority of the Lebanese, who were also unable to enter hospitals that no longer recognize the health coverage of all guarantors.

At the governmental level, Prime Minister Najib Mikati’s government has been negotiating since September with the International Monetary Fund to reach a plan that would help lift Lebanon out of the cycle of economic collapse. But the talks, despite the rapid deterioration, are still in their early stages, and there is no clear horizon for them, as they are still in the stage of determining the numbers, noting that the Lebanese negotiators finally agreed to estimate the size of the losses at 69 billion dollars, but the government has not yet developed any plan to negotiate it.
As for the banks, they are still imposing their own capital control law, which Parliament has not yet succeeded in approving, and they prevent transfers abroad, while the Banque du Liban recently raised the exchange rate of bank withdrawals from dollar accounts from 3900 to 8000 pounds.

While the official exchange rate is still at 1,507 pounds to the dollar, there are multiple exchange rates approved in the market, such as the exchange rate of an exchange platform established by the Banque du Liban to secure dollars to traders and importers at a price lower than the black market, which is currently 22,700 pounds, compared to 28 thousand pounds in the parallel market. The exchange rate of bank withdrawals is 8000 pounds, the exchange rate of 12,000 pounds, according to which depositors withdraw $ 400 per month from their dollar accounts, in addition to $400 in cash.
According to the estimates of the Governor of the Banque du Liban, Lebanon needs 12 and 15 billion dollars “to start again and restore confidence,” at a time when the mandatory reserve in dollars fell from 32 billion dollars to “about 12.5 billion dollars,” in addition to a surplus of 1.5 billion. A dollar currently used by the Central Bank to finance several operations, including partial support for major commodities, especially flour and some medicines.
As for the criminal audit of the accounts of the Banque du Liban, which has sparked widespread controversy since 2020, although it is considered one of the conditions of the international community to help Lebanon, it has not actually begun yet, because the company “Alvarez and Marsal” obtained only days ago the required information from the Banque du Liban.
So, the Lebanese, most of whom have become poor, bid farewell to the year 2021 in the hope of recovery in 2022, but the government, which has not met mainly since mid-October due to disagreements over the fate of the judicial investigator in the port explosion, and which has not yet developed an “integrated economic rescue plan” To negotiate on its basis with the International Monetary Fund, it does not give hope for a better new year on the economic, financial and living levels.