|Lebanese Gather in Front of a Bank to Protest Against Restrictions on Withdrawals. (arabnews.com)|
Last March 7th, Hassan Diab, the prime minister of Lebanon, declared a moratorium on its 1.2 billion dollars. Moratorium refers to a declaration that the country is currently unable to pay its debt, and, thus, defers payment. Mr. Diab said that the national debt amounts to 900 billion dollars, which is 170% of the nation’s gross domestic product (GDP), so delaying the payment is inevitable for Lebanon. The moratorium does not mean default or bankruptcy. With the financial crisis in Lebanon becoming increasingly serious, however, such a declaration indicates a step toward default.
After the civil war from 1975 to 1990, Lebanon has been putting a lot of money into reconstructing the infrastructure. Now the civil war has ended, but anti-government protests against the corrupt former government are still ongoing. To make matters worse, the continuing civil war in neighboring Syria caused the influx of more than a million refugees, which accounts for a quarter of Lebanon’s population.
Under this socio-economic chaos, public services in Lebanon are not appropriately supplied, and withdrawals from the public’s deposits accounts restricted. Mr. Diab has repeatedly pledged various measures to fight social corruption and restructure the Lebanese banking sector. According to the British Broadcasting Corporation (BBC), however, economists suggest that a rescue deal with the International Monetary Fund (IMF) is the only way forward, and real social and political reforms will be needed.
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