Lebanon middle class faces economic crisis

BEIRUT, Jan 23 Reuters -- Lebanese school teacher Sara Wissam and her husband were comfortably off before a run on the local currency decimated the value of their salaries and dragged them into poverty.

The plight of the Beirut couple is common across Lebanon's middle class, which has had to make some unthinkable decisions because of the worsening economic crisis, including reducing food, cancelling trips or applying to emigrate for good.

The mother of three told Reuters that our income lasted a month.

Now it's not enough for one trip to the supermarket to buy essentials, said Wissam, who has cut back on cheese and carefully chooses even the smallest treats for her young children.

Ayman Hadad, a 28-year-old university graduate who got a job in a shop, earns the equivalent of $125 a month and wants to join friends who have emigrated. He applied to go to Canada. He said we lost hope.

Lebanon's descent into financial ruin began in the year 2019 because of a poorly managed spending binge that pushed up debt, political rival factions squabbled and foreign lenders reluctance to bail the country out unless it is reformed.

The World Bank has ranked the crisis as the most severe since the mid- 19th century, a country that was once seen as a wealthy and liberal outpost in the Middle East before civil war broke out from 1975 to 1990.

More than half of the population of 6.5 million are considered poor, and in September more than half of families had skipped a meal, according to UNICEF, compared to just over a third in April.

More than 90% of the currency's value has been lost, and banks have locked savers out of accounts. In the year 2021, the state debt reached 495% of gross domestic product, far above the levels that crippled some European states a decade ago.

The government hasn't done enough to deal with the problems, adding to the frustration.

Since the cabinet quit in 2020 after a devastating Beirut port blast, politicians have been fighting over who should lead an investigation into who was to blame, because caretaker administrations have led Lebanon for much of the last three years.

People are seeing signs of social and economic collapse. A armed man took hostages at a bank demanding access to his trapped savings after the state telecom firm shut down the Internet in parts of Beirut for lack of fuel in recent days.

The country's power grid was creaking before the crisis, with rolling cuts across the country. Now a bankrupt government can barely run its power plants and homes, so they get only an hour of state electricity a day.

Yola al-Musan, who manages a supermarket in Beirut, uses electricity from a shared neighbourhood generator to keep the lights on at home.

Musan races to switch on the washing machine when the national grid starts to fire, only when she has a strong enough current.

As a school teacher, putting enough food on the table for her family has become tough, even though she and her husband both have steady jobs.

Before the crisis, Wissam and her husband's combined salary was 3 million Lebanese pounds a month, which was around $2,000. At the exchange rate at the time of 1,500 to the dollar at the time of the crisis.

Their combined earnings are worth the equivalent of $140, even after Wissam's modest wage hike. The price of imported goods and local products went up as the currency plummeted to 25,000 to the dollar.

Lebanon's leaders hate each other and accuse each other of corruption. She said that they are all corrupt and thieves, echoing widespread public and international criticism of how the crisis has been handled.

Politicians, some former militia leaders and others from families who have a lot of influence over the nation's Christian and Muslim communities, acknowledge corruption exists but deny they are responsible and say they are doing their best to rescue the economy.

The International Monetary Fund, which is seen as a key to unlocking overseas support led by France, has been delayed due to a long and ongoing dispute over who should preside over the port blast inquiry.

Sunni Muslim Saudi Arabia stepped back years ago, angered by Iran's rise in influence in Lebanon through Hezbollah, a group supported by Tehran which has a heavily armed militia.

Najib Mikati, a billionaire prime minister whose post is held by a Sunni under the sectarian political system, tried to mend Gulf ties. Hezbollah hosted conferences for domestic opponents of the monarchies and stepped up criticism of the Gulf states.

The cabinet is expected to hold its first meeting in more than three months on Monday to discuss a draft budget that will help financial pressures and quell public anger.

Shadi Ali Hamoud, 39, said if each of them donated a small amount of their wealth to the poor, there would be no poor in Lebanon. Look at the fridge, it's empty.