Lebanon: Financial crisis or national collapse?

Abstract

Lebanon’s collapse is of unprecedented magnitude relative to its economy. The crisis combines a foreign debt default, a currency devaluation and banking sector bankruptcy in a “perfect storm” unseen since the 19th century, according to the World Bank. More than an economic collapse, its consequences are threatening the survival of the country as we know it. Lebanon’s crisis is no accident. Many date the start of the collapse to October 2019 and the popular uprisings in the country. Most citizens are in denial, unable to grasp the depth of the economic and financial losses they face. But the sources of the collapse can be found earlier, at the end of the 1990s. The currency peg fixed in 1997 allowed deficits to accumulate that have been unsustainable since 2016. More than a financial crisis, it is the end the economic and social contract established in 1989 to end the civil war.