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An analysis of some official figures and financial and economic indicators indicates that the Lebanese banks, which have been carrying out a work strike for regarding two weeks and closing their departments and branches in various regions, in protest once morest the issuance of court rulings once morest a number of them in favor of some deposit holders.. that these banks are currently facing difficult situations. “Catastrophic” as a result of its actions during the past three years. However, it is not legally considered “bankrupt”, but only “in default”, and it is still in the “stop paying” stage, i.e. the stage that precedes “bankruptcy”.
At the end of last year, the balance of payments deficit amounted to $3.2 billion, an increase of 63% compared to the deficit recorded at the end of 2021 of $1.96 billion. Thus, the value of the accumulated deficit from the end of 2019 until the end of last year amounted to regarding $21.55 billion. This is with the knowledge that the results of the balance of payments reflect the real conditions of the economy, the value of the national currency, and the activity of the financial and banking sectors in the light of the net exit and entry of hard currencies, whatever their form and source. Thus, the deficit in the balance of payments reflects the exit of foreign currencies more than the ones that entered. Among its most prominent components: the trade balance, which recorded a deficit of 15.5 billion dollars at the end of last year, and remittances of expatriates, the net of which is estimated at more than 3 billion dollars.
In light of the continuing cumulative deficit in the balance of payments, with the political blockage of governance crises, as a result of the presidential vacuum, the failure to elect a president of the republic, and the conduct of public affairs through a resigned caretaker government.. the exchange rate of the Lebanese pound deteriorated until the price of the Beirut dollar exceeded 76 thousand pounds. This raised the percentage of families living below the poverty line to 75% (the global average is 28%), of whom 36% live under the extreme poverty line (the global average is 9%).
The banking sector was also affected by the continuing cumulative deficit in the balance of payments, as deposits in foreign currencies decreased between October 2019 and December 2022 by regarding $28 billion, as well as loans by the same amount, while banks’ foreign exchange liquidity decreased by $4.2 billion. In broader detail, total customer deposits decreased by $42.7 billion as a result of withdrawals and loan repayments of significant size. Accordingly, total deposits declined during the same period from $168.4 billion to $125.7 billion, or by 25.4%. It was noted that the banks incurred losses of $11.2 billion, and these are not all the losses incurred by them, but rather the losses that resulted from a section of their portfolio, and there is no write-off of losses resulting from their investments with the “Central”, in addition to their losses in the “Eurobond” and the losses of positions Negative pieces are in dollars.
Although Lebanon’s banks are in a “faltering” situation and are “stopping payments”, and on the verge of “total bankruptcy”, they are also at a crossroads, either upgrading or deteriorating. This was confirmed by a recent report issued by Bank Audi, which indicated the need to achieve a positive political-economic scenario for the advancement of Lebanon, in order for it to record a growth in GDP of regarding 5%, and inflation of less than 30%, in light of the relative stability of the exchange rate. This positive scenario revolves around electing a new president as soon as possible, forming an effective and credible government, and then a comprehensive agreement with the International Monetary Fund. Provided that the situation is strengthened in the medium and long term with the start of gas exploration (following the signed demarcation agreement), which improves Lebanon’s external position, its Arab and international relations, the public finance deficit and the economic and social prospects in general. While waiting for this to happen, the Lebanese will face further deterioration and the negative repercussions of the “failed state” practices.
* Lebanese writer specializing in economic affairs
