Coronavirus epidemic delivers tough blow to Lebanon’s dying economy

Some 220,000 people have lost their jobs in Lebanon since October.
Sunday 29/03/2020
A man walks past a banner that reads “We’re bankrupt” in the northern Lebanese port city of Tripoli, March 18. (AFP)
No options. A man walks past a banner that reads “We’re bankrupt” in the northern Lebanese port city of Tripoli, March 18. (AFP)

BEIRUT--Through 15 years of civil war and various bouts of violence since, Lebanon’s Barbar eatery never closed its doors, serving sandwiches to customers even if it meant doing so from behind sandbags.

The coronavirus pandemic, however, has done what wars could not: close bars, restaurants and entertainment spots across Lebanon. It’s an economic gut punch at a time when Lebanon is mired in its worst financial crisis.

While residents of many other countries count on a government bailout, that’s not an option in Lebanon, teetering on the edge of bankruptcy.

“We have never gone through something like this — ever,” said Barbar owner Ali Ghaziri, standing outside his restaurant on Beirut’s normally busy Hamra street, now deserted.

Earlier in March, heeding orders from the government amid the spread of the coronavirus, Ghaziri closed the iconic chain’s two branches in Beirut, leaving only its delivery service operating.

In Beirut’s Gemmayze neighbourhood, pubs and restaurants usually spilling onto the street with noisy, beer-toting youngsters are shuttered. Even Lebanon’s famous corniche, usually dotted with coffee vans, corn-on-the-cob vendors and people doing their morning exercise, is empty.

Lebanon has suffered in recent years from a lack of economic growth, high unemployment and a drop in hard currency inflows from abroad. The financial crisis erupted after nationwide protests over widespread corruption and decades of mismanagement by the ruling political class engulfed the country in October.

That led to bank closures and crippling capital controls on cash withdrawals and transfers, raising fears about depositors’ savings in US dollars. The local currency has lost up to 60% of its value on the dollar on the black market.

As the crisis deepened, the government announced it would no longer pay its foreign loans, marking the country’s first default.

Among sectors hardest hit by the crisis have been food and beverage businesses, a mainstay of Lebanon’s economy.

From last September through December, more than 800 food and beverage institutions closed and approximately 25,000 people — 17% of those who work in the sector — lost jobs, various estimates stated. In January, another 200 institutions closed.

The Lebanese government ordered the coronavirus-related lockdown in mid-March, closing its international airport and ports and land border crossings. Restaurants and nightclubs were ordered to close, a severe blow to one of the most vital sectors in Lebanon, known for its cuisine and bustling nightlife.

“We reached a point where we were hit by one catastrophe after the other, and when we reached the coronavirus crisis, we had no more reserves at all,” said Maya Bekhazi Noun, general secretary of the syndicate for restaurant owners.

“We were at the bottom, bottom, bottom, taking the last breath,” she said. “This now was a mortal blow to the sector.”

Unlike in other countries under lockdowns, where banks remained open, the banking association in Lebanon decided to defy government orders and close for two weeks, in an apparent effort to preserve liquidity.

“It’s going to be devastating on the economy in the short term and the long term,” said economist Kamel Wazni, speaking about businesses that have closed. “There’s going to be a lot of pain among many sectors of the economy.”

He said the government will be affected because it will not be able to collect taxes, further increasing the budget deficit.

Lebanese Prime Minister Hassan Diab acknowledged that the state was struggling to tackle the coronavirus fallout amid the economic crisis. Human Rights Watch recently said Lebanon’s financial crisis and dollar shortage resulted in a scarcity of medical supplies needed to deal with the COVID-19 outbreak

While governments abroad approve stimulus packages to compensate lost businesses, experts in Lebanon warned of extremely dire times ahead with no potential for bailouts. Government officials said they are not seeking an International Monetary Fund bailout for now, fearing it would come with conditions that would be too painful.

Ghaziri said he is worried about his staff, 75% of whom he had to send home after sales dropped 75%.

His father founded the Barbar chain — a household name in Lebanon — in 1979, four years after the country’s 15-year civil war erupted. The eatery served kebabs, shawarma and other treats throughout the conflict and various other wars. The restaurants closed for a few hours only when Ghaziri’s grandfather died and for the funeral of former Prime Minister Rafik Hariri after he was assassinated.

“During the civil war, there were street battles. So, you could talk yourself out of problems. Now you cannot do anything,” Ghaziri said of the coronavirus.

Some 220,000 people have lost their jobs in Lebanon since October, a survey released in February by information provider InfoPro stated.

InfoPro said the number of companies that had closed increased 20% from November-January. One-third of all companies reduced their work force by 60%.

The World Bank projected a 0.2% GDP contract in 2020 before protests began in October. More recent estimates suggest the contraction could be more than 1% of GDP.

Diab, whose government is negotiating debt restructuring, said Lebanon’s debt reached $90 billion — 170% of GDP — one of the highest in the world.

Government estimates say about half of Lebanon’s population could end up below the poverty line.

Ali Badran said he lost his job at the restaurant where he worked for 11 years in October because of the crisis. He was left jobless just as he was preparing to marry his long-time fiancee.

With no income, the 36-year-old stopped renovation work in the apartment he had bought and started looking for a new job in late October. That was days after nationwide protests broke out against the country’s political elite.

On March 1, he started a new job at another restaurant in Beirut but he said he is worried the lockdown means he could be laid off again.

“I am worried that if things stay as they are I might lose my new job,” he said.

(The Associated Press)