‘Ponzi scheme’ crashed Lebanon’s finances: UN chief

Share:
United Nations Secretary-General Antonio Guterres speaks during a press conference in Beirut, Lebanon, Tuesday, Dec. 21, 2021. (AP Photo/Hassan Ammar)

Lebanon’s financial collapse was caused by “something similar to a Ponzi scheme”, UN Secretary General Antonio Guterres said in videotaped comments made during a closed-door meeting on his visit to Beirut this week.

Lebanon is in the third year of an economic meltdown that began in 2019 when the financial system collapsed under the weight of huge state debt — the result of decades of corruption and mismanagement — and the unsustainable way it was financed.

Critics of the Lebanese authorities have compared the financial system to a Ponzi scheme, depending on fresh borrowing to pay back existing debt. The central bank has denied this.

“As far as I understand, what has happened in Lebanon is that Lebanon was using something similar to a Ponzi scheme … which means that together with of course corruption and other, probably, forms of stealing, the financial system has collapsed,” Mr Guterres said in the video, which was circulated widely on social media.

The crash has caused the Lebanese pound to lose more than 95 per cent of its value and people have been frozen out of their deposits in the paralysed banking system.

File photo: A protester shouts slogans in front of burning garbage containers used to block a main road during a protest against the increase in prices of consumer goods and the crash of the local currency, in Beirut, Lebanon . The Arabic placard reads:”Salameh (the Central Bank governor) is still at the bank while the lira is dead.” One protester told the reporters ‘We’re sick of the Lebanese politicians . They are still bickering while the currency has completely collapsed ’ (AP Photo/Hussein Malla)

Mike Azar, an expert on the Lebanese financial system who attended the meeting, confirmed Mr Guterres made the remarks at the closed-door gathering between the UN chief and members of Lebanese civil society on Tuesday.

Mr Azar, a former professor of economics at Johns Hopkins University in the US, said Mr Guterres made the comments in response to a statement he had made.

Asked by Reuters about the remarks, a UN representative said the secretary general’s views on the financial crisis were “more fully expressed” at a news conference at the end of his visit.

At that news conference, Mr Guterres said Lebanese leaders needed to convince the international community to support Lebanon by enacting reforms “in relation to the economic, the social and the political life of the country” and by adopting a “credible economic recovery plan” for talks for an International Monetary Fund support programme.

The National

Share:

Comments

One response to “‘Ponzi scheme’ crashed Lebanon’s finances: UN chief”

  1. Lebanon – Madness and humiliation in line to withdraw dollars from the bank
    Soldiers in the Lebanese army alongside civilians are struggling to get into banks across Lebanon in order to withdraw their money in dollars.
    The reason for the hysteria and humiliation felt by those standing in line is an amendment issued today by the Central Bank of Lebanon that can withdraw money in dollars at a value of 22 thousand pounds per dollar while the gate in the black market in Lebanon stands at 27 thousand pounds per dollar.
    (I will mention that the ridiculous official rate stands at about 1500 pounds per dollar)
    Lebanese citizens are willing to suffer in line for the bank to profit from the gap between the dollar exchange rates which stands at around 5000 pounds per dollar https://t.me/abualiexpress/32429

Leave a Reply

Your email address will not be published. Required fields are marked *