Complex Made Simple

Lebanon’s cash crunch now faces a trash crisis, again!

Poverty, unemployment, hard currency shortages, Covid-19, blackouts, inflation and now a trash crisis rearing its ugly head in Lebanon

Lebanon spends $154.5 dollars to manage every ton of solid waste Food prices have shot up by 72% since last autumn Lebanese are bartering clothing, kitchenware, memorabilia and whatever of value in exchange for food, and essentialss

Reports emerged yesterday that City Blu, Lebanon’s waste management company collecting 2000 tons per day and successor to Sukleen, announced a strike for lack of contractual payments by the government.

And the trash on Lebanon’s streets is back, reminiscent of the 2015 trash crisis, when garbage was spotted like a strange topographic anomaly from space satellites.

Is another cash from trash deal in the works?

Maybe not this time, as a barter economy takes hold just enough to stave off starvation.

A management waste land   

Lebanon adopted its first law on solid waste management in September 2018, but its implementation has been stalled.

 The lack of a comprehensive solid waste management strategy meant that Lebanon spends $154.5 dollars to manage every ton of solid waste. By comparison, Algeria, Jordan, and Syria spend $7.22, $22.8, and $21.55, respectively. On average, Lebanon spends around $420 million per year on solid waste management, while countries like Jordan and Tunisia spend between $48 and $54 million per year, according to The Waste Management Coalition. 

Economic disaster

Food prices have shot up by 72% since last autumn, the non-governmental Consumer Protection Association says.

A shortage of US dollars has seen that currency rate plummet to more than 8,000 LP (Lebanese Pounds) on the black market from the official US Dollar peg at 1,507 LP in place, but is effectively only used for imports of wheat, fuel and medicine.

A World Food Programme report in June found that 50% of Lebanese feared they would not have enough to eat.

A package of 14 basic items that once cost 37,500 pounds now costs 105,000.

The minimum wage is 675,000 pounds – worth $450 at the official rate but about $70 at the black market rate which is now used to price consumer goods including clothes, toiletries and cleaning products.

Lebanon is mired in an economic crisis rooted in dependence on imports and a $90bn state debt pile, which it defaulted on in March. 

According to the Financial Times, Lebanon’s GDP is expected to shrink 13.8% this year, quoting official figures, hard currency inflows have stopped, the Lebanese pound has depreciated by 80% on the black market and inflation is about 56%.

Image by the EconomistThe country’s unemployment rate stood above 30% at the end of May, while annual food inflation has skyrocketed to around 190%.

Power cuts across the capital city of Beirut have exceeded 20 hours a day in some areas.

Lebanon also suffers from a refugee crisis, where an estimated 1.5 million people have come to Lebanon from Syria since 2011.

There are over 2300 cases of documented Covid-19 crisis and 36 dead.  

Dollars leaving in secret

Bankers have “smuggled” up to $6bn out of Lebanon since October, circumventing controls introduced to stem capital flight, according to the country’s former top finance civil servant, Alain Bifani, who resigned as director-general of public finance two weeks ago in protest at the state’s handling of the crisis, speaking to the Financial Times in an interview. 

Bifani claimed banking sector data showed $5.5bn-$6bn had been “smuggled outside the country” by “bankers who would [not allow] every other depositor to take $100”.   

Bifani became the second official to resign from the government team negotiating a bailout with the IMF, which have stalled over internal Lebanese disagreements on the size of financial sector losses.

Lebanon is seeking a $10 billion loan from the IMF and has held at least 16 rounds of negotiations.

Lebanese officials estimate that the central bank has accumulated $50bn in losses. 

Barter economy 

A number of Facebook groups have emerged over the past few weeks, allowing Lebanese people to post what they are looking for and detail what they are willing to give in return.

On a now 12,000 member Facebook page called “Lebanon barters”, people are bartering clothing, kitchenware, memorabilia and whatever of value in exchange for food, and essential items for babies and children, like formula.