News

Lebanese financial crisis escalates, more violence, banks strike

Angry bank clients, some armed, stormed five commercial banks across Lebanon on Tuesday, asking for their money over withdrawal limits that Lebanese banks imposed due to the financial crisis that hit the country in 2019.

Lebanon has been witnessing the consequences of 2019’s financial crisis caused by the Covid-19 pandemic, political corruption, Beirut port explosion. Since then and the Lebanese people are suffering in many ways, including:

  • Bank withdrawal limits imposed on the informal capital controls are one of the significant consequences that Lebanese suffer from.
  • Shortage in the U.S. dollar, which is used in everyday transactions in Lebanon, and the crash in the pound’s value have undercut the country’s ability to pay for imports, including essentials such as wheat and oil.
  • Short-term loans suspension: Banks in Lebanon have stopped giving short-term loans to businesses and no longer provide them with U.S. dollars for imports, forcing people to turn to the black markets.
  • Significant inflation┬ácauses a massive loss of purchasing power and increased poverty.

The recent violent storms hit five different commercial banks across Lebanon, including BLC Bank- the Chtaura branch, the First National Bank Branch in the port city of Tripoli, Byblos Bank in the southern town of Tyre, IBL Bank in the Beirut suburb of Hazmieh, and the Haret Hreik branch of BLOM Bank.

Among the five incidents this week, depositors were angry about the delays in accessing their salaries and savings.

In one of the cases, a depositor was trying to sell his kidney; he was in deep debt and needed to wire money to his son, who was studying in Ukraine, as Reuters reported. But the holdups ended up receiving a sum of their deposits.

Banks Strike

Last month, a spree of seven holdups in a single week saw the banking association announce a closure for about a week.

Banks in Lebanon have 20,000 employees, which, considering their families, means that around 50,000 people are reliant on employment in the banking sector.

Head of the Bank Employees’ Union George Al-Hajj said members would abide by the association’s decision as it “is meant to financially, morally and physically protect employees and preserve their safety.”

However, the economic expert Jassem Ajaqa said the closure of banks “constitutes a harmful blow and inevitably leads to a rise in the exchange rate.”

Ajaqa warned that “if the political authority does not initiate reform measures, things are heading for the worse, and we may reach a stage where the central bank, Banque du Liban, loses its ability to curb the dollar’s rise.”

Related Articles