By Edmund Blair
(Reuters) – Lebanon is grappling with a deep economic crisis after successive governments piled up debt following the 1975-1990 civil war with little to show for their spending binge.
Banks, central to the service-oriented economy, are paralysed. Savers have been locked out of dollar accounts or told that funds they can access are now worth a fraction of their original value. The currency has crashed, driving a swathe of the population into poverty.
WHERE DID IT GO WRONG?
Lebanon’s financial collapse since 2019 is a story of how a vision for rebuilding a nation once known as the Switzerland of the Middle East was derailed by mismanagement as a sectarian elite borrowed with few restraints.
Downtown Beirut, levelled in the civil war, rose up, with skyscrapers built by international architects and swanky shopping malls filled with designer boutiques that took payment in dollars or Lebanese pounds.
But Lebanon had little else to show for a debt mountain equivalent at the time to 150% of national output, one of the world’s highest burdens. Its electricity plants can’t deliver 24-hour power and Lebanon’s only reliable export is its human capital.
HOW DID IT BORROW SO MUCH?
Some economists have described Lebanon’s financial system as a nationally regulated Ponzi scheme, where new money is borrowed to pay existing creditors. It works until fresh money runs out. But how did the nation of about 6.5 million people get there?
After the civil war, Lebanon balanced its books…
