Lebanon financial, fuel crises escalate amid continued protest

Lebanon uprising: Financial, fuel, electricity and medicine crises escalate despite banks urging calm
4 min read
10 November, 2019
A liquidity crisis has caused shortages in medicine and fuel as endemic corruption continues to cut off Lebanon's electricity supply.
Lebanon's liquidity crisis has caused fuel and medicine shortages [Getty]
Lebanon is beset not only by the economic crisis that in part sparked this year's unprecedented anti-government protests but also by escalating fuel, medicine and electricity crises.

The failure of the country's political elite, who have drawn much ire from protesters, to stem the tide of such crises continues to fuel the nationwide demonstrations which began in protest against a proposed tax on WhatsApp calls but have since evolved into an anti-sectarian, anti-corruption uprising.

Lebanese bankers and government officials on Saturday attempted to assuage worries over the economy, urging citizens not to "panic" over the security of their funds.

Banks across the country were closed for the first two weeks of demonstrations. Branches reopened at the start of this month but a rush to withdraw funds and the rapid devaluation of the Lebanese currency have prompted banks to impose capital controls that have further crippled financial security for many in the country.

For two decades, the Lebanese pound has been pegged to the US dollar, with both currencies used interchangeably in daily life.

Lebanon already faced a dollar liquidity shortage before the onset of mass protests. Despite government promises to resolve the issue, the crisis has in fact worsened.

The increasing demand for the dollar, with banks largely refusing to allow withdrawals of the currency, has seen a 30 percent devaluation of the Lebanese pound on the black market, trading at 1,900 to the dollar.

At the same time as the public is gripped with anxiety over liquidity, many in the country find themselves unable to access basic goods.

Fuel shortage

According to Fadi Abu Shakra, a representative for the union of Lebanese fuel distributors, around 60 percent of the country's petrol stations have been closed for business, with those still opening struggling to meet demand as fuel supplies are depleted.

A man drives past a closed petrol station [Getty]

The remaining amount of fuel in the country will only be enough for two days supply, Abu Shakra claimed in a statement to Turkey's state news agency Anadolu.

"Companies will not be able to import more fuel because of the refusal of banks to open credit lines in dollars," he explained.  

While banks initially agreed to ease imports by providing dollars and a fixed exchange rate, lenders went back on their promises after the resignation of Prime Minister Saad al-Hariri.

'Health catastrophy'

The currency crisis is also threatening a shortage in vital medical equipment, threatening what some have called a "health catastrophy".

"Patients may start dying because of the lack of filters, for example," Slyman Haroun of the Hospitals Syndicate said on Friday at a press conference broadcast by Al-Jazeera. "Our stocks won't last more than a month. The government must pay its dues to the hospitals right away and banks should ease transactions so we can pay importers."

Haroun has requested the government pay pending bills to hospitals and doctors totalling more than $1 billion, in addition to banks facilitating imports of medical supplies.

If not, "hospitals will as a warning for a single day on Friday, November 15, stop receiving all patients except emergency cases" including for dialysis and chemotherapy, he said according to AFP.

Continuing electricity cuts

Lebanon has long struggled to provide continued access to electricity throughout the day, with frequent cuts seen as symptomatic of endemic government corruption.

The electricity sector takes in some $2 billion in state funds every year but still fails to provide consistent services.

The World Bank on Friday called on the Lebanese political establishment to form a new cabinet "within a week" to avoid instability and a loss of confidence in the country's economy.

Protesters have urged the formation of a new government, but talks helmed by President Michel Aoun have failed to result in any progress at this time.

While demonstrators are calling for a new government, they have also called for the fall of the political elite, of whom all but Hariri remain in power. Their continued grip on authority will hamper any real efforts at reform, according to activists.

Grand Mufti Sheikh Abdul Latif Derian, the country's foremost religious authority for Sunni Muslims, endorsed the protests on Saturday, calling for a new government made up of qualified experts.

"The time has come to meet the people's demands and the national free will that transcends sects, political parties, and regions," he said.

Derian's call for a new government echoed an earlier statement made by Maronite Patriarch Bechara Boutros al-Rai, Lebanon's top Christian religious authority.

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Agencies contributed to this report

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