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WAR ECONOMY

Between hope and despair: Here's what happened last week in Lebanon’s economic news

Your recap of Lebanon’s economic news in a time of war.

Between hope and despair: Here's what happened last week in Lebanon’s economic news

Displaced person sleeping on Beirut's Corniche. (Credit: Moe Yassine).

Note from the author:

Chaos, fear, uncertainty: Three words that summarize the past week in Lebanon, where unremitting terror continues to reign. With the south ravaged, and parts of the capital going up in flames, families with nowhere to go were forced to sleep in Martyrs’ Square and along the beach shores of Beirut to escape brutal Israeli bombardment. Since Sep. 16, Israeli attacks have killed more than 1,030 people across Lebanon, bringing the total death toll to 1,640 since the onset of war on Oct. 8, the Lebanese Health Ministry confirmed. Caretaker Prime Minister Najib Mikati estimates that around 1 million individuals have become internally displaced, while only 128,100 have been officially registered. The situation is very dire, and with its economy already in shambles and no cease-fire in sight, any hopes of the slightest recovery have now been shattered.

“Ours is essentially a tragic age, so we refuse to take it tragically. The cataclysm has happened, we are among the ruins, we start to build up new little habitats, to have new little hopes. It is rather hard work: There is now no smooth road into the future, but we go round or scramble over the obstacles. We’ve got to live, no matter how many skies have fallen.” As I write to you today, D.H. Lawrence’s words have never resonated with me more. When things feel helpless and out of control, we can only sit and hope for better days. We have to.

Despite everything, I try to look back and walk you through the key points of what seemed like an endless, hellish week:

-The World Food Programme yesterday appealed for $105 million to fund cash and food support for up to “one million people.”

-The Lebanese Ministry of Economy and Trade reassured consumers on Tuesday that "the stock of wheat available in the local market is sufficient for at least two months."

The ministry's statement urged consumers "not to rush for bread or flour, as the supply of wheat remains organized to ensure market stability." It assured that the Ministry of Economy "will continue to coordinate with relevant parties to ensure the regular and uninterrupted availability of these essential goods. More shipments will arrive shortly." Meanwhile, endless queues formed outside bakeries in the Baalbek-Hermel region, heavily bombarded by Israeli airstrikes. Residents are struggling to obtain bread from stores and supermarkets, most of which are closed. Restaurants, gas stations and pharmacies have also shut their doors.

-Joe Salloum, president of the Order of Pharmacists, clarified in a statement on Monday that "medications for chronic diseases remain available in factories and company warehouses for about six months."

"We are implementing a plan to ensure their delivery to all pharmacies and hospitals, even in the event of road closures," he added.

The president of the Syndicate of Pharmaceutical Importers and Warehouse Owners, Joseph Gharib, also stated Wednesday that the current stock of medications held by importers and pharmaceutical institutions is sufficient for five months. In a reassuring statement, he added that the strategic reserves of medications are enough "to meet the market's needs for four months."

The supply chains for medication have not been disrupted by the conflict. "As long as the ports remain open and unblocked, import companies will be able to meet market needs," he added, stating that import companies are continuously working to increase stock levels.

-Following a decision by its Central Council, the Central Bank, headed by interim governor Wassim Mansouri, has asked Lebanese banks to pay their customers who benefit from the mechanisms set up by main circulars No. 158 and 166, three times the monthly amounts that the latter withdraw each month. This measure, applied "in view of the emergency conditions facing the country" should allow beneficiaries to withdraw this envelope in one go, "at the beginning of October," notes the BDL in its press release.

The statement finally mentions that the mechanisms of these two texts will be applied normally again in November. According to a source at the BDL, this is a measure aimed at "supporting" the Lebanese who have blocked deposits during this difficult period.

-The European Union has announced the release of 10 million euros in humanitarian aid for the people of Lebanon impacted by the escalation of hostilities between Hezbollah and Israel. In its statement, the European Commission clarified that the emergency funding aims “to address the most urgent needs, such as protection, food assistance, shelter, and healthcare."

-The Ministry of Telecommunications announced in a statement that it issued temporary measures, requesting Alfa and Touch, Lebanon's two main telecom communications, to implement those exceptionally due to the escalation of Israeli aggressions. The measures require the two companies to extend the validity period of prepaid cellular lines of all categories for an additional week. The Minister of Telecommunications also requested a payment extension of cellular bills for fixed lines for an additional month until further notice.

-The war in the Middle East, whose front has spread to Lebanon, is set to take a further toll on the country's already fragile economy, warned the European Bank for Reconstruction and Development (EBRD) in a revised economic forecast on Thursday. After contracting by 0.2 percent in 2023, Lebanon's Gross Domestic Product (GDP) is expected to shrink by 1 percent this year, according to the EBRD's projections, which until now had anticipated slight growth in 2024.

Projections are likely to darken further, as the escalation “will certainly weigh on growth” in the country, Beata Javorcik, chief economist at the EBRD, commented to AFP.

-The Ministry of Economy and Trade announced in a statement released on Tuesday that a large pack of Lebanese bread, commonly known as “Arabic bread,” will now be priced at LL 65,000 as the subsidy of wheat through a World Bank loan “nears its end.” The new price will be implemented starting Sep. 26, 2024.

According to its statement, the ministry said it's been holding meetings “to prepare for the post-subsidy phase ... and maintain supply stability in light of the difficult situation the country is facing.” The ministry has priced a pack of 840 grams (an increase of 40 grams compared to previous packs) bought from bakeries at LL 65,000, and LL 77,000 for the same pack purchased from stores and supermarkets.

-Despite the agitated security situation following the intensification of Israeli bombardments in several regions of Lebanon and high demand in displacement areas, gas prices have risen only slightly. In contrast, prices of diesel and fuel oil for powering electric generators continued to fall, and gas prices remained stable, the latest figures published by the Energy Ministry showed.

Here are the new prices:

Feature of the week:

Unprecedented escalations and brutal Israeli bombing campaigns have put the sector’s readiness to test. With diplomatic efforts faltering and no cease-fire in sight, concerns have been raised over whether Lebanon’s hospitals can withstand yet another catastrophe. The country’s already overburdened healthcare system had been hammered by the economic crisis, leaving the sector grappling with shortages of medical resources. Read my piece:

Read here

As the war intensifies, can Lebanon’s hospitals bear the brunt?

To better days ahead, see you all next week. 

Note from the author:Chaos, fear, uncertainty: Three words that summarize the past week in Lebanon, where unremitting terror continues to reign. With the south ravaged, and parts of the capital going up in flames, families with nowhere to go were forced to sleep in Martyrs’ Square and along the beach shores of Beirut to escape brutal Israeli bombardment. Since Sep. 16, Israeli attacks have...