Bankruptcy: The Future of Lebanon

Lebanon was a developing country. According to media reports, the country has made great strides in the tourism sector. Even a few days ago, we knew that their economy was getting stronger. But we did not think that the country would fall on its face like that. Suddenly I learned that the energy and food crisis in the country had increased. Then came the news that Lebanon had been declared bankrupt.

If any person or company is declared bankrupt then that person has no value in the society. The debt calculations of them is changed. As they go bankrupt, their property is sold and distributed among the creditors proportionately. What will happen if a country goes bankrupt? Such questions are born in our minds.

Lebanon


Bankruptcy of Lebanon

In an interview with the local television channel Al-Jadeed, Lebanese Deputy Prime Minister Saadeh Al Shami declared that the Lebanese state is bankrupt. The central bank of the country has also gone bankrupt. 

"We want to reduce the level of damage to the people now," the Deputy PM said. He made this announcement on April 4, 2022. Then the painful news spread all over the world.

Al Shami further added that the current situation in the country is "not to be ignored. So withdrawals from Lebanese banks will be stopped." 

He said that after bankruptcy, the loss will be calculated and divided between the state, central bank and claimants or depositors. However, the percentage of this share has not been decided yet. Surely that rate would be disappointing.


What is happening there after the declaration of bankruptcy?

There is a good reason for this problem. Attempts are being made to withdraw the invested money from the bank. But in many cases vain attempts are being made. The Lebanese people now think of themselves as beggars, not just poor. Because their central bank declared bankruptcy.

After the declaration of bankruptcy, there are fears of increasing social unrest. The price of goods was skyrocketing. Now they are worried about what they will do if prices rise further. 

It has been like looking at foreign relief. Maybe they are waiting for this. Otherwise people may die of famine there.


What happens if you go bankrupt?

When a person or institution is unable to repay a loan from a creditor, financial institution or bank, that person or institution is considered bankrupt. According to the law, the court declare the person or organization bankrupt. 

Individuals and organizations are usually legally declared bankrupt. Different countries have different laws for the bankruptcy of these two types of entities.

Italian term Banca rotta became Bankruptcy in English. The pair of words means broken benches

In ancient times, investors, financiers and money changers would sit on benches in various suburbs of Venice and lend people money at interest or exchange their foreign currency. The modern word bank also originated from the Italian bench.

The idea is that if a money changer fails to pay his debts, his bench will be disbanded. So the word bankruptcy was used. It is possible that the word was only popularized without any special meaning. The word bankruptcy, however, does not bring happiness at all.

We can put Lebanon on the brink of institutional bankruptcy.


How did Lebanon go bankrupt?

Lebanon had already fallen into the irresistible current of bankruptcy. Expenditure was more than the income of the country. Basic needs like food, water, healthcare and education are elusive to them. The power crisis also led to the collapse of the power system.

According to the Anadolu Agency, Lebanon's currency has fallen by as much as 90 percent due to various crises. As a result, the daily general needs of the people are not being met.

Materials to meet basic needs have become elusive. The power system is almost out of order in the energy crisis. As factories and production are affected, there is a terrible change in income and expenditure.

Lebanon has been in economic crisis since November 2019. These included extreme devaluation of the currency and shortages of fuel and medical services.

The World Bank has called the world's worst economic and financial crisis since the mid-18th century.

The economic downturn is exacerbated by the explosion at the port of Beirut and the impact of the coronavirus.

According to the Daily Sabah, about 40 percent of the working people were unemployed before the declaration of bankruptcy. 82% of the people live below the poverty line.

In addition to the liquidity crisis and corruption, recent developments have led to currency collapse, political instability, massive deficits, high unemployment and poverty.

Dollars could not be bought from the bank.

The country's leadership did not gain anything by negotiating with the IMF.


What will be the future of Lebanon?

There is no end to the speculations about the future of Lebanon after the declaration of bankruptcy. The country's deputy prime minister has said the situation will return to normal. The only thing that can be deduced from his words is the redistribution of money.

Much will depend on what the IMF, World Bank, ADB, IDB are planning. But the neighboring rich countries also have something to do.

Our idea, a political change is going to come there. With the food-drink-energy crisis, the political crisis is likely to reduce or increase human suffering.

They will be careful in the future. Lebanese will be more vocal against corruption.


Central Bank's Governor Denies

Lebanon's central bank Banque Du Liban's governor Riad Salameh has denied the bankruptcy. Who has been charged with money laundering before.

"What is being circulated about the bankruptcy of the central bank is incorrect," Mr Salameh said in a statement sent to The National.


Identity of Lebanon

The Lebanese word means 'white snow'. It is an Arab state in West Asia. The official language of the country is Arabic because more than 90% of the people of the country speak Arabic. French is used for international communication. In addition to being a founding member of the United Nations, the country is a member of the Arab League, the Non-Aligned Movement, the Organization of Islamic Cooperation, and the Organization de la Francophonie. Lebanon is home to a population of about 6 million and an area of ​​10,452 sq km.

The oldest evidence of Lebanese civilization is more than 6,000 years old. Modern Lebanon was home to the Phoenicians, a marine culture that flourished for nearly 3,000 years.

Lebanon is a parliamentary democracy - where top government positions are proportionally reserved for representatives of certain religious groups. According to the constitution, parliamentary elections are held for 4 consecutive years. The legislature elects the president for a six-year term. Lebanon's last parliamentary elections were held in 2009 and presidential elections in 2008. The Christian president and legislature jointly elect a Sunni Muslim prime minister. The speaker of parliament is a Shia Muslim.

-Jisan Al Jubair

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