Unraveling Responsibility: The Lebanese Financial Crisis

Report by Lea Fayad, English adaptation by Nadine Sassine 

Who bears the most significant responsibility for the crisis we have reached?

Let's go back to basics.

The depositor placed their money in Lebanese banks.

The banks placed most of these funds with the Central Bank of Lebanon.

The Central Bank of Lebanon primarily used the funds for:

Stabilizing the exchange rate at 1500.

Financing the state and its expenses amidst waste, corruption, and the inflation of the public sector.

Financial engineering.

When the state stumbled, so did the Central Bank and the banks and depositors.

Therefore, logically and hierarchically, in terms of responsibility:

The state bears the primary responsibility due to its mismanagement and monetary policies.

Next is the Central Bank of Lebanon, which, despite knowing the country's problems, continued to provide funds.

Then come the banks.

Lastly, the depositors, many of whom were enticed by high-interest rates.

Unfortunately, what is happening now is the opposite. The depositors are paying the price primarily, losing their deposits. Currently, out of around $90 billion in deposits, only $9 billion is cash in the reserves of the Central Bank of Lebanon. 

The banks have lost their capital value due to the currency collapse, rendering them unable to function normally.

Meanwhile, the state is acting as if it is not concerned, taking no steps to address the crisis or implement reforms.

What worsens the situation is that after the crisis, the state continued to spend depositors' money on subsidies and other expenses, much of which was likely squandered or misappropriated.

Even worse, it is still following the same approach until now, despite working on a plan to address the financial situation.

How?

To be continued