Report shows country has slid into a protracted financial crisis, with Syrian refugee population hit particularly hard.
Poverty in Lebanon has more than tripled over the past 10 years, with the overall proportion of the country’s population living below the poverty line soaring to 44 percent, according to the World Bank.
The bank’s report, released on Thursday, was conducted in five of the country’s eight governorates, showing that poverty rose from 12 percent in 2012 to 44 percent in 2022, with stark differences between different areas of the country.
In Beirut, poverty actually declined from 4 to 2 percent of the population over the decade, while in the largely neglected Akkar region in the north, the rate increased from 22 to 62 percent.
The report also revealed glaring differences between Lebanese citizens and the country’s large population of Syrian refugees. While the poverty rate among Lebanese was 33 percent in 2022, it reached 87 percent among Syrians that same year.
However, when including factors such as access to electricity and education as well as income – so-called “multidimensional poverty” – researchers found that 73 percent of Lebanese and 100 percent of non-Lebanese residents qualified as poor.
The report provided the most comprehensive snapshot of poverty levels to date since the onset of the economic crisis in 2019, which saw the currency collapse, while inflation skyrocketed and the country’s gross domestic product (GDP) plummeted.
Many Lebanese found that the value of their life savings had evaporated. The situation has since got worse, with the currency losing about 95 percent of its value and banks locking most depositors out of their savings.
Many see an International Monetary Fund (IMF) bailout as the only path out of the crisis, but since reaching a preliminary agreement with the IMF in 2022, Lebanese officials have made limited progress on reforms required to clinch the deal.
Visiting Beirut this week, an IMF delegation found that “some progress has been made on monetary and fiscal reforms”. But, the institution said in a statement, measures “fall short of what is needed to enable a recovery from the crisis”.
Ernesto Ramirez Rigo, the head of the visiting IMF mission, said that Lebanon’s ongoing refugee crisis, fighting with Israel at its southern border and the spillover from the war in Gaza were exacerbating an already dire economic situation.
Pakistani voters head to the polls on Thursday amid a deep-seated economic crisis. Inflation is hovering at 30 percent, close to 40 percent of people live below the poverty line, and the debt-to-gross domestic product (GDP) ratio has climbed to 72 percent. Pakistan’s new government will have to contend with these and an ageing public infrastructure.
“We have power outages every day for two hours,” says Muhammad Waqas, a janitor from Islamabad. “In the summer, when it’s hot, you sit idly and suffer.”
As with other state-owned firms, the inability of successive governments to invest in Pakistan’s National Transmission and Despatch Company has left it prone to failure.
More recently, the COVID-19 pandemic and energy supply challenges dampened Pakistan’s growth prospects and constrained efforts to diversify its export base away from low-value-added products – such as cotton and rice – to higher-value goods.
In late 2022, meanwhile, monsoon floods displaced eight million people and cost the country $30bn in damage. The loss of cotton crops ravaged the country’s textile industry, a key source of exports. In all likelihood, Pakistan’s growth rate fell into negative territory in 2023.
Pakistan, which imports much of its food and fuel, consistently records large trade deficits. Owing in part to elevated commodity prices, foreign exchange reserves dwindled to less than one month of imports last May, leading to shortages of vital goods.
The following month, Islamabad narrowly avoided default after it secured a $3bn loan from the IMF – its 23rd fund programme since 1958. However, the lending package came with strict conditions and unpopular reforms.
As part of the deal, the government agreed to impose new taxes on its faltering power sector. It also agreed to lower utility subsidies, which led to sharp hikes in electricity prices, hitting poorer households particularly hard.
Inflation, which reached nearly 30 percent in December, has been climbing since the start of last year after Pakistan’s central bank agreed to liberalise its exchange rate as part of a pre-existing IMF programme. Once exchange controls were dropped, the value of the currency fell sharply.
The Pakistani rupee was Asia’s worst-performing currency in 2023, depreciating by roughly 20 percent against the US dollar. “We think the rupee will continue trending down slightly,” said Krisjanis Krustins, a director at Fitch Ratings. “This will lower Pakistan’s current account deficit as goods from abroad will become more expensive, compressing import levels.”
According to the State Bank of Pakistan, the country posted a balance of payments surplus of $397m last December.
Krustins told Al Jazeera, “Pakistan’s goods imports fell by 27 percent in the last calendar year. As for exports, they continue to be held back by limited human capital and poor infrastructure. So, corrections in the trade account have had a depressing impact on the economy.”
Recent job losses have lifted the official unemployment rate to a record high of 8.5 percent, pitching an additional 8.4 to 9.1 million people into poverty.
‘Structural issues’
Separately, Pakistan has long suffered from “structural issues”, says Tariq Banuri, professor of economics at the University of Utah.
“For starters, Pakistan’s growth rate is not high enough to absorb its rapidly expanding population. It’s also one of the world’s worst performers on tax collection. Agricultural landowners are exempt from income tax, and there’s no capital gains tax on real estate.”
Successive governments have stopped short of imposing robust tax legislation for fear of upsetting powerful business interests, Banuri said. “But that may change this year because of the debt situation,” he added.
Islamabad’s failure to boost tax revenues and modernise state-owned enterprises has generated persistent fiscal deficits and a large debt burden. In absolute terms, external debt reached $125.7bn last year.
Looking ahead, Pakistan faces $24.6bn in external debt repayments by the end of June, the bulk of which is owed to China.
China is Pakistan’s largest bilateral creditor, and Beijing agreed to roll over $2.4bn in loans last year. Many economists expect the incoming government to try and secure longer-term financing from the IMF – its current deal expires in April.
Given the cutbacks to public spending last year, “further fiscal consolidation is unlikely”, says Yousuf Farooq, director of research at Chase Securities. “The Fund is going to try and eke out further conditions, but probably from wealthier sections of society.”
“Assuming the new government can get another IMF loan, it will struggle to repay unless it imposes new taxes on agriculture and real estate. If it can also roll over short-term contracts with longer repayment schedules, I’m hopeful that debt will fall in the near term,” he said.
In the meantime, foreign investment continues to be hamstrung by security concerns along the Pakistan-Afghanistan border. Since the Taliban returned to power in Kabul in 2021, Islamabad has accused its neighbour of harbouring fighters carrying out attacks on its soil.
Political crisis
An unfolding political crisis is also threatening Pakistan’s economic recovery. Today, Islamabad’s fragile democracy is overseen by a caretaker government following Imran Khan’s dismissal as prime minister in April 2022.
The legitimacy of the February 8 elections has been questioned as Khan is absent from the ballot sheet. He is in jail on corruption charges. And while he is disqualified from running, Khan’s approval rating stands at 57 percent, higher than any other politician.
As things stand, the head of the Pakistan Muslim League-Nawaz (PMLN) – is favourite to win. Sharif’s PMLN has assumed power four times in the past three decades, under either himself or his brother Shehbaz Sharif.
Earlier this month, the Supreme Court further weakened Khan’s Pakistan Tehreek-e-Insaf (PTI) campaign by banning the use of a cricket bat as its symbol – a serious setback in a country where millions of illiterate voters identify candidates by their party logos.
For Banuri, the economics professor, “People are right to criticise Pakistan’s political system, which is dynastic and extractive. But for all that, I remain an optimist. I think the worst of the economic crisis is behind us.”
“While I always hope tomorrow will be better than today, I do not think the main political parties will offer meaningful change. They seem to be far more concerned with getting into power,” he added.
New president Milei warns of painful measures as currency value slashed, subsidies cut, public works tenders cancelled.
Argentina’s government has announced it will slash the value of its currency, the peso, by more than 50 percent against the US dollar as its new far-right president seeks radical solutions to fix the country’s worst economic crisis in decades.
President Javier Milei‘s economy chief announced the painful measure on Tuesday, saying it was necessary for Argentina to “avoid catastrophe”.
The devaluation would drop the peso’s value from 400 to the dollar to more than 800 to the dollar, a blow to tens of millions of Argentinians already struggling to make ends meet.
Economy Minister Luis Caputo announced a raft of other austerity measures, including sweeping subsidy cuts, the cancellation of tenders for public works projects, and plans to axe nine government ministries.
However, the government plans to double social spending for the poorest to help them absorb the economic shock.
“For a few months, we’re going to be worse than before,” Caputo said in his televised address.
“If we continue as we are, we are inevitably heading toward hyperinflation,” he said.
A sign outside a store reads, in Spanish, ‘We accept dollars’, in Buenos Aires, Argentina, on December 12 [Tomas Cuesta/Reuters]
‘Tough pill to swallow’
The planned measures drew praise from the International Monetary Fund (IMF), to whom Argentina owes $45bn, but sparked harsh criticism from some progressive activists.
Left-wing activist Juan Grabois said that Caputo had declared “a social murder without flinching like a psychopath about to massacre his defenceless victims”.
“Your salary in the private sector, in the public sector, in the popular, social and solidarity economy, in the cooperative or informal sector, for retirees and pensioners, will get you half in the supermarket,” Grabois said. “Do you really think that people are not going to protest?”
Jimena Blanco, chief analyst with risk consulting firm Verisk Maplecroft, said Milei’s government was trying to temper an otherwise guaranteed economic crash landing.
“He promised a very tough pill to swallow and he’s delivering that pill,” she said. “The question is how long will popular patience last in terms of waiting for the economic situation to change.”
Economic shock
The economic overhaul is part of the new strategy by Milei, who was sworn in on Sunday and has aggressively sought to tackle the fiscal deficit he believes is the root of Argentina’s economic woes.
A self-described “anarcho-capitalist”, Milei argues harsh austerity is needed to put Argentina back on the path to prosperity and that there is no time for a gradualist approach. However, he has promised any adjustments will almost entirely affect the state rather than the private sector.
Argentinians, disillusioned with skyrocketing inflation and a 40 percent poverty rate, have proven surprisingly receptive to his vision.
Still, Milei’s road map is likely to encounter fierce opposition from the left-leaning Peronist movement’s lawmakers and unions it controls, whose members have said they refuse to lose wages.
As Brazil takes over the G20 presidency on December 1 from India, Luiz Inácio Lula da Silva will be challenged to fulfil his promise of holding up the interests of the global south amid two ongoing wars and a slowing global economy.
Lula also takes over at a time of bitter internal divisions within the group, the legacy of outgoing president Narendra Modi, whose team, eager to force a joint declaration, ran roughshod over diplomatic niceties in closed-door meetings.
Despite these hurdles, Lula is forging ahead and has announced Brazil’s three key priorities as head of the G20: social inclusion and the fight against hunger, phasing out fossil fuels in favour of renewable energy and reforming global economic governance.
The Group of Twenty – the G20 – is a forum for the world’s largest economies to coordinate on key issues of global policy. Between them, G20 countries represent 85 percent of global output and two-thirds of the world’s population.
The G20 is made up of the European Union and 19 other countries, a mix of advanced and emerging economies. At its G20 leadership summit in September, India invited the African Union – representing 55 countries from across the continent – to become a member of the group.
This was seen as a step to underscore Modi’s self-prescribed role as “the mother of democracy … to mitigate the global trust deficit” between rich and poor nations.
The G20 was founded in 1999, following the Asian financial crisis. Originally designed as a council for finance ministers to discuss macroeconomic policy, its scope has since widened to cover issues ranging from global development to climate change and gender equality.
Critics, in turn, have dismissed the G20 as an ineffectual talking shop. In over 200 meetings, the group did coalesce around its yearly declaration. Otherwise, New Delhi only delivered one joint statement – on the African Union.
Against a backdrop of rising geopolitical tensions, South Africa and Brazil have openly criticised Israel’s bombardment of Gaza. For its part, China hosted a delegation of Muslim countries in November calling for a ceasefire. Elsewhere, the ongoing conflict in Ukraine has also undermined efforts at consensus-building.
Despite maintaining a neutral stance on that conflict, India has become more critical of Russia in recent months. Modi has also pared back military purchases from Moscow and bolstered diplomatic ties with the West.
Vladimir Putin, who is under an international arrest warrant for war crimes, declined to attend September’s gathering in New Delhi. President Xi Jinping of China also skipped the event, amid growing geopolitical tensions with India and deepening ties with Russia.
That didn’t stop India from “turning the annual summit into a commercial for the personality cult of Modi,” said Jayati Ghosh, an economics professor at the University of Massachusetts Amherst. “In practice, it was an ineffectual presidency,” with the host keener on boosting its domestic image than addressing global challenges.
“While trying to project India as a global superpower, Modi passes on the baton with no shortage of problems … the world economy is slowing, climate change is looming and conflicts in the Ukraine and Palestine have undermined north-south relations,” she added.
Lula also takes over at a time of bitter internal divisions within the group, the legacy of outgoing president Narendra Modi [File: Evelyn Hockstein/AFP]
Ahead of this week’s handover, Lula informed a virtual summit of G20 leaders that “I hope this [Israeli-Palestinian ceasefire] agreement can pave the way for a lasting political solution to the conflict.”
In October, Brazil spearheaded a UN Security Council resolution which called for a pause in the conflict but was vetoed by the US.
“Lula’s position on Israel is delicate, but he’s arguably the best-placed global statesman to try and stop the carnage,” added Ghosh.
Elsewhere, Brazil’s president has irked Western leaders by suggesting that Russia and Ukraine share joint responsibility for their conflict. He has publicly backed both Xi Jinping and Vladimir Putin to attend the G20 summit in Rio de Janeiro next year.
Equitable global growth
At the G20 summit in New Delhi in September, President Lula urged leaders to try and end world hunger by 2030.
“Part of that could be achieved through the creation of a global task force against hunger,” a Brazilian government official, who asked not to be named, told Al Jazeera.
“The task force would seek to rally support in areas like low-carbon agricultural research and farming insurance improvements, especially in food-insecure countries … that would require more funding from wealthy nations,” the source said. It’s not clear how likely it is that those would come through.
Lula has also backed the idea of a minimum global corporate tax rate of 15 percent. The Organisation for Economic Cooperation and Development (OECD) plan, designed in 2021 to clamp down on tax evasion and stem decades of tax ‘competition’ between governments, could generate at least $150bn in additional global tax revenues annually.
Almost 140 governments have signed up to the OECD agreement, and are at varying stages of turning the proposal into law.
“By expanding the OECD’s scheme, Brazil also wants to ramp up investment in the green transition. Lula wants the G20 to deploy more funds in renewable energy and nature conservation projects,” the official noted.
India turned the G20 summit into ‘a commercial for the personality cult of Modi’ [File: Dar Yasin/AP Photo]
Reforming multilateral institutions
For years, Lula has lobbied to reinforce the role of multilateral bodies such as the United Nations to try and resolve global challenges. His commitment to diplomacy, however, goes beyond a penchant for consensus.
At the UN General Assembly in New York in September, Lula defended the need to reshape the global governance system. “The unequal and distorted representation at the helm of the IMF [International Monetary Fund] and World Bank is unacceptable,” he said.
In 2022, the IMF provided $160bn in SDRs, the Fund’s reserve currency, to European countries and just $34bn to all of Africa.
“The unfair allocation of SDRs is only part of the problem,” says Rogerio Studart, a former Brazilian representative to the World Bank.
“Fund quota limits are also too small for emergency lending,” said Studart. He was alluding to IMF programmes such as the Resilience and Sustainability Trust, where country grants are capped at 150 percent of their capital commitments into the fund.
“These curb the amount of money available for climate disasters, especially in low-income countries. I think that Lula will try and raise country quotas for emergency lending, and attempt to reduce the conditions attached to these programmes,” he added, pointing out that its success was unclear as this had been tried for years,”
Studart also dismissed the World Bank’s “cautious” approach to risk tolerance.
“The Bank can raise considerably more money for developing countries by adjusting its loan-to-equity ratio,” he said. A higher ratio would add to the Bank’s lending capacity, but come with a higher risk of non-repayment.
His remarks echo a G20 report published in July which said that by raising their lending ratio slightly, groups like the World Bank could unlock billions of extra dollars in new lending. “Brazil will echo the findings from the report,” Studart said.
For Ghosh, the economics professor, “Lula is nothing if not pragmatic. Where the previous G20 presidency was more about domestic politics, Lula is the ideal candidate to try and restore a measure of stability to today’s fractious world order.”
We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept”, you consent to the use of ALL the cookies.
This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
Cookie
Duration
Description
cookielawinfo-checkbox-analytics
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checkbox-functional
11 months
The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checkbox-necessary
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-others
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-performance
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
viewed_cookie_policy
11 months
The cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
