Lebanon has been going through a terrible economic crisis for over two years now. This crisis broke out in 2019 and is putting a strain on the daily life of the Lebanese. The reasons for the crisis that is currently affecting Lebanon are multiple, and we can cite the bad decisions taken by corrupt leaders for several decades.
A good example of this corruption that is bringing Lebanon to its lowest point today has just surfaced at the beginning of October 2021.
While Lebanon’s leaders seemed to feign astonishment at the catastrophic state of the country that led to the start of this terrible economic crisis in 2019, an audit by the International Monetary Fund (IMF) already pointed to “Lebanon’s immense financial weakness” in 2016.
Rather than take emergency measures given the gravity of the situation, Lebanon’s leaders and the Lebanese central bank managed to get the IMF to delete several pages of the audit report from the final version.
At the time, the IMF experts stated that “the central bank’s net deficit, a hole of 4.7 billion dollars, represents 10% of the country’s GDP” and stressed that “local banks do not have the liquidity to face a possible crisis”.
The figure of the deficit of the Bank of Lebanon (BDL), as well as an entire chapter devoted to the solvency of the country’s banks, have thus disappeared from the final IMF report published in January 2017.
It was the Lebanese authorities who insisted on the removal of these disturbing parts. Nevertheless, one can legitimately question the attitude of the IMF that agreed to do so. The IMF thus bears an important responsibility in the unprecedented crisis that Lebanon is currently experiencing.
By failing to sound the alarm at the right time, the Lebanese experts have given a truncated picture of the country’s finances.
The information in the initial report might have helped limit the drama that Lebanon has been experiencing since August 2020, the worst since the 1975–1990 civil war, with a poverty rate that rose from 28% to 55% in one year, 6 million Lebanese deprived of access to their bank accounts, shortages of oil, and medicines.
Between 2017 and the intensification of the crisis in Lebanon at the beginning of the summer of 2020, a real power struggle took place between the IMF and the governor of the Bank of Lebanon Riad Salamé. The latter being ready to do anything to hide the reality of the financial situation of his country.
Continuing its headlong rush, the Bank of Lebanon was then in a frantic race to capture foreign capital by promising investments with record returns, with the complicity of the local banking system to keep its head above water, while hiding the extent of the debt, which continued to accumulate.
The collapse of this system finally took place in October 2019.
After announcing its first-ever default, Beirut entered into talks with the IMF in 2020, which eventually collapsed amidst disagreement on the Lebanese side over the distribution of losses to be borne by the state and its main creditors.
Negotiations between the financial institution and the new government of Najib Mikati, formed last September after more than a year of political vacuum, are expected to resume in the coming weeks.
In the meantime, the IMF, which has promised to put its hand in the wallet in exchange for reforms and political guarantees, has already paid more than $1 billion to the central bank in September 2021.
This is probably a way to redeem oneself after having acted in such a scandalous way at the time by letting the Lebanese authorities hide the reality. This is where the limits of the current monetary and financial system appear once again, where human corruption has a predominant place.
The IMF should never have allowed Riad Salamé to do this, just as he should never have been able to lie and hide the truth for so long. The opacity of the current system and the concentration of power in the hands of a minority of people allow these devastating actions for the vast majority of the world’s inhabitants.
For we are talking about Lebanon here, but the situation is not much better in many other countries around the world.
A system such as Bitcoin allows us to address this type of problem. Satoshi Nakamoto created it in response to the fact that it was no longer possible to trust central bankers and private bankers.
With a system like Bitcoin, auditing can be done by anyone at any time. Anyone can see what is going on in this open and transparent system. It becomes possible to monitor a country’s finances without having to worry about powerful leaders making secret deals to hide the truth from the people.
A truth that always comes out in the form of an economic or financial crisis. And in the end, it is always the people who have to pay for the unscrupulous actions of a minority of people who think they are above the law.
The adoption of Bitcoin as the official currency in El Salvador will allow us to see what such a people-owned system can bring for countries like Lebanon in the future. All eyes are on President Nayib Bukele who is changing the destiny of his country since the beginning of September 2021.
Among the Lebanese people, who are currently suffering martyrdom, such recognition of Bitcoin by the government is gaining popularity. If the pressure from international financial institutions such as the IMF will be strong for Lebanon not to opt for this path, there will come a time when this solution will become unavoidable.