By: Zahid Jadwat
It turns out the widely-reported statement by Lebanese Deputy Prime Minister Saade al-Shami was made in jest, but Lebanon has not formally declared bankruptcy.
“Unfortunately, the state is bankrupt, as is the central bank, so we have a problem … the loss has occurred,” Deputy Prime Minister Saade al-Shami said during an interview on Sunday (April 3).
The next day, al-Shami told local broadcaster OTV he had been speaking about the state’s inability to contribute significantly to bridging financial sector losses, “which means it has no liquidity”.
In an interview on Radio Islam, Habib Battah, an investigative journalist and editor of the news website beirutreport.com, said el-Shami’s comments were in reference to the Middle Eastern nation’s overall economic troubles.
“It wasn’t a formal declaration of bankruptcy – it was just a statement that was said in jest on a television show and then the Prime Minister came out and said it wasn’t; they still have some kind of assets that were left. He meant that in a big-picture sense and not in a general sense. The country doesn’t have a lot of money and that’s true. People have seen their salaries and savings go down by 90%. So we’ve already experienced a crash and this is just stating the obvious,” Battah said.
Lebanon is in the third year of a financial implosion caused by decades of corruption and poor policies that have led the currency to devalue by more than 90%. Earlier this year, a draft government financial rescue plan estimated a roughly $70 billion (R1 trillion) hole in the financial sector.
Battah said: “What it has meant for us is that the entire country has lost billions of dollars. The country defaulted on its debts recently… what it meant is a downgrade in the country’s economy by rating agencies and people’s money has very little value”.
Listen to the full interview here: