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ACT Alliance Alert: Lebanon Crisis, 16 March 2021

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Lebanon
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ACT Alliance
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SITUATION

Going into its third year of severe economic recession, Lebanon faces its worst and hardest depression ever since the end of the Lebanese Civil War that went on for 15 years. Between the Syrian refugee influx crisis, street protests, COVID-19 pandemic, dangerous depletion of resources, Beirut port explosion on August 4th, 2020, protracted absence of a functional cabinet and overlapping economic, financial and social crises, Lebanon grapples to survive on the edge of collapse.

Lebanon has the world’s highest number of refugees per capita. The country hosts around 500.000 Palestinian refugees, 500.000 migrant workers from different nationalities and 1.5 million Syrian refugees of whom about 78 percent lack legal status (UNHCR) and 89 per cent live below the extreme poverty line.1

Lebanon’s financial crisis, foreign currency shortages and the devaluation of the Lebanese Pound have prompted commercial banks to impose strict caps on withdrawing dollars and a block on most transfers abroad2

. Residents’ bank savings have also been blocked and withdrawal allowances barely meet people’s needs. Despite a decades-long rate of 1,507.5 LBP to the dollar, the black-market value of the USD is now around 12,000-13,000 LBP, which indicates a reference of the currency’s real worth and Purchasing Power Parity (PPP). Due to corruption and an unfriendly system to businesses, Lebanon has limited selfsustaining domestic industries. Central Bank reserves are going dry and shortages in goods and materials in the market are increasing. The loss of purchasing power hence is dramatic and mostly felt by those who earn in Lebanese Lira and have no other sources of income in foreign currencies. Lebanon’s average inflation rate in 2020 soared to 84.8 percent, the highest since 1992.The end-ofyear inflation (December 2020 relative to December 2019) stands at 145.8 percent with the price of food and non-alcoholic beverages increasing by 5 times and the price of clothing and footwear increasing by 6.6 times.

Additionally, and according to UNOCHA, 220 people were killed by the Beirut Port explosions, with more than 6,500 injured including 1,000 children and some 300,000 people who became homeless. Moreover, 120 schools, the country’s main grain silos and at least 15 medical facilities, including three major hospitals have sustained damage ranging at around $5 billion as per Beirut’s governor; These explosions further increased vulnerabilities and inequalities in the country. On top of that, COVID-19 greatly hit the country. The virus had started spreading again in an almost uncontrollable manner right after the Beirut port explosion, and hospitals are barely able to find beds (Both regular and ICU) for even the most critical patients. The dollar shortage has restricted the import of vital medical equipment and led banks to curtail credit lines. Medical supplies, including oxygen, ventilators, gloves and masks, are scarce, compromising Lebanon’s ability to deal with the coronavirus pandemic.4 Many health workers resigned and others have died of the virus itself. The country has since been put under severe lockdown compromising people’s remaining ability to generate income and protect their families. With stressors adding up, poverty in Lebanon is likely to continue to worsen in 2021. UNESCWA estimates reveal that more than 55% of the country’s population is now trapped in poverty and struggling for bare necessities.