Recently Sri Lanka and Lebanon are on the brink of bankruptcy!

After Sri Lanka faced a serious shortage of foreign exchange, material shortages, soaring prices, and shortage of power supply, the country entered a state of emergency and was on the verge of bankruptcy, Lebanese Deputy Prime Minister Shami announced without warning on April 4 that "Lebanon is in a state of bankruptcy, as is the Lebanese Central Bank, with huge losses."

Shami commented on the state of the country's economy in an interview with local television, saying that "Lebanon is in a state of bankruptcy". He said that the losses caused by the bankruptcy will be shared by the central and local governments and the Lebanese central bank, and there is no objection to the distribution of responsibilities for the losses. "The indisputable fact is that we can't live in denial anymore, we can't open (bank) withdrawals to everyone, and I hope we're in normalcy."

According to the relevant regulations, "bankruptcy" means that the government is unable to pay debts and interest as they come due. Among them, one of the reasons for the bankruptcy of a country is a lack of liquidity, when a country is temporarily unable to repay its debts and pay interest due to its inability to liquidate its asset base quickly, it may declare “bankruptcy”. However, Dr. Anis Abu Diab, a member of the Lebanese Economic and Social Council, said in an interview that "while Lebanon has [really] faltered in repaying its debts, it is not yet a bankrupt country".

Lebanon's central bank governor Salamé was also quick to issue a statement denying that he had led the central bank's bankruptcy for 30 years. “Despite the losses in Lebanon’s financial sector, the central bank is still fulfilling its mandate under the law, and the news of the central bank’s bankruptcy is untrue.”

Lebanon, located on the east coast of the Mediterranean Sea in southwestern Asia, borders Syria to the east and north, Israel to the south, and the Mediterranean Sea to the west. Since 2019, due to the explosion in Beirut and the impact of the new crown epidemic (on August 4, 2020, 2,750 tons of ammonium nitrate stored in the warehouse of Beirut port, the capital of Lebanon, exploded, killing nearly 200 people and injuring more than 6,500 people). , 300,000 people were made homeless overnight. The explosion caused direct economic losses of 4.6 billion US dollars and indirect losses of more than 10 billion US dollars), and Lebanon fell into a serious economic crisis. Even the World Bank warned that the current economic crisis in Lebanon is likely to be one of the three worst economic crises in the world since the mid-19th century.

According to World Bank data, between 2019 and 2021, the scale of Lebanon's economic contraction has reached 58%, and the gross domestic product (GDP) has plummeted from about 52 billion US dollars in 2019 to 21.8 billion US dollars in 2021. The degree of contraction is The best in the world. In 2021, Lebanon's public debt will increase to $100 billion, equivalent to 212% of the country's GDP. That makes Lebanon the fourth-highest debt-to-GDP ratio in the world, after Japan, Sudan and Greece, the World Bank said.

Lebanon is currently in the midst of "one of the world's worst economic collapses in 150 years" as assessed by the World Bank. The World Bank also forecasts that the Lebanese economy will shrink by 10.5% in real GDP in 2021, on top of a 21.4% contraction in 2020.

Lebanon's currency has lost more than 90 percent of its value in the past two years, and poverty rates have soared, with UN figures estimating that more than three-quarters of Lebanon's population lives below the poverty line. According to Joanna Wronecka, the UN Special Coordinator for Lebanon, 90% of the 1.5 million Syrian refugees living in Lebanon, who account for almost a quarter of the country's population, live in extreme poverty.

In March 2020, Lebanon defaulted on its sovereign debt for the first time as foreign exchange reserves fell to "critical and dangerous" levels.

In 2022, due to the conflict between Russia and Ukraine, prices in Lebanon will fluctuate sharply again. You must know that the country relies heavily on imports, and 60% of the total wheat consumption comes from Ukraine and Russia. In response, Lebanese economist Elie Yakuri even warned that the Russian-Ukrainian conflict would evolve into Lebanon's own crisis. He also made a special explanation with flour, "The price of one kilogram of flour was 1,000 or 2,000 Lebanese pounds in the past, but it may rise to 40,000 Lebanese pounds in the future." In short, due to the impact of political, economic, epidemic and other factors, Lebanon has , the Middle Eastern country is going through the worst economic crisis in its history.