Lebanon as a state and its central bank have gone bankrupt, according to Deputy Prime Minister Saadeh al-Shami.
"The state has gone bankrupt as did the Banque du Liban, and the loss has occurred, and we will seek to reduce losses for the people," al-Shami told the local Al-Jadeed channel.
He said the losses will be distributed among the state, the Banque du Liban, banks and depositors.
"There is no conflict of views about the distribution of losses," he added.
Lebanon’s economic meltdown, which began in October 2019, was the culmination of the country’s post-war era. The war’s militia leaders became the political leadership and have kept a lock on power ever since. They ran an economy that at times boomed but was effectively a Ponzi scheme riddled with corruption and mismanagement.
The scheme finally collapsed in what the World Bank calls one of the world’s worst economic and financial crises since the mid-1800s.
Al-Shami said the country's situation "cannot be ignored," hence bank withdrawals cannot be open to all people.
"I wish we were in a normal situation," he added.
The Lebanese currency has lost 90% of its value, eroding people's ability to access basic goods, including food, water, health care and education, while widespread power outages are common due to fuel shortages.
Also, salaries lost their buying power, dollars in banks became inaccessible and prices skyrocketed in a country where nearly everything is imported. As much as 82% of the population now lives in poverty, according to the United Nations. Unemployment is estimated at 40%.
The crisis was made worse by the coronavirus pandemic and a massive explosion at Beirut’s port in 2020 that killed 216 people, wounded thousands and destroyed parts of the capital.
While the economic system collapsed, the political one hasn’t. The same leadership, entrenched in power, has done virtually nothing to address the crisis. Refusing basic reforms, they have made no progress in talks with the International Monetary Fund (IMF).