Lebanese liquidity crisis
The country experienced liquidity shortages in the years prior to 2019 but the full extent of the fragility of the economy were concealed through financial engineering by the governor of the central bank.
A growing number of citizens have resorted to armed robbery as the only way to extract their own deposits (now vastly reduced in real terms) from banks when they desperately need to pay for basic services such as healthcare.
[15] As a result, the Lebanese economy managed to avoid the consequences of a liquidity crisis at the time, but it increased the public debt considerably in dollars and cost the entire economy a fortune: the International Monetary Fund estimated that the banks that took part in the operation made US$5 billion while the central bank pull-out cost was US$13 billion in foreign currency.
[25] The USD black market exchange rate continues to fluctuate substantially due to devaluation of the Lebanese pound caused by acute dollar shortages within Lebanon.
The fall of the exchange rate caused the 17 October Revolution in 2019, which ultimately resulted in the resignation of Prime Minister Saad Hariri and his cabinet.
[25] Prime Minister Hassan Diab stated that the country would default on its Eurobond debt and seek out restructuring agreements amid a spiralling financial crisis that affected foreign currency reserves.
Due to the lack of foreign currencies, the prime minister said that the reserves had fallen to "a worrying and dangerous level which pushes the Lebanese government to suspend payment of the 9 March Eurobond maturity because of a need for these funds.
[25][31] The shortage of US dollars, which are used in everyday transactions in Lebanon, and the crash in the value of the pound have undercut the country's ability to pay for imports, including essentials such as wheat and oil.
Banks have stopped giving short-term loans to businesses and no longer provide them with US dollars for imports, forcing people to turn to the black markets.
[36] Of seven million Lebanese, about 80% are below the poverty line, while an estimated 100,000 with "fresh money"—funds imported since the 17 October 2019 protests—are wealthy and use downtown Beirut restaurants and stores.
[39] The decision led to significant increases in fuel prices amid an economic crisis in the country, but the government was unable to alleviate shortages.
[41] On 9 October 2021, the country underwent a 24-hour full blackout as the two biggest electricity generators, Zahrani and Deir Ammar, ran out of fuel.
[44] Rising unemployment (reaching a peak of 13.27% in 2020),[45] a depreciating local currency, skyrocketing inflation, and the removal of subsidies for medicines and fuel have made it harder for many people to meet their basic needs.
[46] In February 2023, Lebanon devalued its official exchange rate for the first time in 25 years, weakening it by 90% but still leaving the local currency well below its market value due to the ongoing liquidity crisis.
[47] During the liquidity crisis, Lebanon received humanitarian and financial assistance from Saudi Arabia,[48] Kuwait,[49] Turkey,[50] the United States,[51] and the European Union.
[57] In February 2022, a subpoena was issued by Judge Ghada Aoun after Riad Salameh failed to show up to court for questioning, while his whereabouts were unknown after a raid in his office and two homes, as part of an investigation for alleged misconduct and corruption.
