Lebanon has become the world's third most indebted country, and the coronavirus has made things worse
In the ongoing protests in Lebanon, people have focused their anger on one particular target: banks. At least a dozen branches of different banks have been firebombed since protests broke out this week.
What’s happening now is the continuation of a spontaneous protest drive which started on October 17 when a few people converged at Beirut’s Riad al Solh Square to record protest against a proposed tax on WhatsApp, the popular messaging service. Over the years, successive governments have borrowed heavily from domestic and foreign lenders. Around 50 percent of the state revenue goes to paying off the debt. At the same time, a major chunk is used to pay salaries of government employees, leaving very little for productive investments in sectors such as health and education.
This turned out to be a bounty for commercial banks, which lent to the government at a high rate and booked profits. In some of these banks, politicians hold shares, something that has added to the anger on the streets of Lebanon and Tripoli. The central bank has also kept the Lebanese pound rigidly pegged at 1,507 pounds to a US dollar. With the pound fixed at such a high artificial level when there’s a shortage of dollars in the market, banks have faced a barrage of withdrawals from depositors.
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