2023-05-16 17:37:14
In a new report on Lebanon, the World Bank considered, today, Tuesday, that “the growing dollarized monetary economy, estimated at regarding $9.9 billion in 2022, or regarding half the size of the Lebanese economy, represents a major obstacle to achieving economic recovery.”
According to the report of the Economic Monitor for Lebanon issued by the World Bank today, “despite the emergence of signs of normalization with the crisis, the Lebanese economy is still in a state of sharp decline, and it is far from the path of stability, let alone the path of recovery.” The failure of the banking system in Lebanon and the collapse of the currency into a growth and dollarization of a monetary economy estimated at half of the GDP in 2022. Nevertheless, the policy industry in its current state is still characterized by fragmented and inappropriate decisions to manage the crisis, undermining any comprehensive and fair plan, which leads to a drain on capital. Money in all its aspects, especially human and social, gives way to deepening social inequality, so that only a few winners and a majority of losers emerge.
According to the World Bank report, “the pace of economic decline in Lebanon slowed down in 2022, while there has been no fundamental change in the path of decline in general.” He added: “It is estimated that real GDP will decline by 2.6 percent in 2022.” , bringing the total economic contraction since 2018 to 39.9 percent of GDP. Despite the slight improvement in private sector activity, the widening current account deficit, which is an old structural defect, continues to affect growth prospects.
The report saw that the deterioration of the Lebanese pound continued sharply despite the interventions of the Banque du Liban to try to stabilize the exchange rate in the parallel market, and added: “The currency lost more than 98 percent of its pre-crisis value by February 2023, and its collapse has accelerated recently. Likewise, the inflation rate reached 171.2 percent in 2022, which is among the highest rates in the world, mainly due to the high prices of food and non-alcoholic beverages. And with the expectation that private consumption will continue to increase, albeit at low rates, and the current account deficit will decline, the Lebanon Economic Observatory report expects that real GDP will contract by an additional 0.5 percent in 2023.
Nevertheless, the report clarified that “the slowdown in the contraction of economic activity does not mean the achievement of stability,” noting that “at the level of all economic pillars, decisions related to managing the crisis continue to undermine the adoption of a comprehensive and fair recovery plan,” and said: “For example, The foreign exchange exchange platform, which is the main monetary tool used by the Banque du Liban to stabilize the exchange rate of the lira, is no exception, as the Economic Observatory for Lebanon report found that the exchange platform represents an unfavorable monetary tool that led to short-term rises in the exchange rate of the lira at the expense of The reserve and financial position of the Banque du Liban, especially in the absence of a new exchange rate and monetary framework.
He continued: “This platform has also turned into a mechanism for achieving profits from arbitrage operations amounting to regarding $2.5 billion since its inception. Obtaining the dollar displayed on the platform achieves large and risk-free profits due to the existence of a margin between the currency price on the platform and the currency price in the parallel market.” “.
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