Economic Crisis in Lebanon Worsens

01 October 2021

As the financial crisis in Lebanon worsens, Welfare Association looks to support some of the most vulnerable Palestinian families

Economic Crisis in Lebanon Among the Worst in the World

The financial crisis in Lebanon is worsening. According to the World Bank it might be one of the worst financial collapses that the world has seen in the past 200 years, “the impact of this worsening crisis will soon become catastrophic since there is no end to it in sight.”

All outlooks indicate that the crisis is not a passing one, and its repercussions threaten the livelihoods of the Lebanese and others living in Lebanon, especially refugees. The Lebanese pound has lost more than 90% of its value against the US dollar, which has reduced the purchasing power of most households. As a result, poverty rates in Lebanon increased from 28% in 2019 to 55% in May of 2020 according to the UN Economic and Social Commission for Western Asia (ESCWA) estimates, while extreme poverty rates nearly tripled from 8% to 23%.

This month the severity of this collapse, pushed the WFP to warn that the food security of 2.2 million people in Lebanon is at risk. The population in Lebanon is approximately 6 million. The basic food basket cost went up more than 400% in less than 2 years, as the price of bread alone went up 170% between December 2020 and July 2021, and there are now shortages of milk.

The health of the residents of Lebanon is also at risk, as the crisis has led to medicine shortages, and the medicine which is scarcely available has more than doubled in price. Patients face the risk of hospitals shutting down due to diesel shortages, as the national power company is cutting power for 21 hours a day and private generators have also reduced power generation as a result of high diesel costs (diesel prices went up more than 260% between December 2020 and July 2021). Power cuts and fuel shortages are obstacles for the new school year, as students may not be able to attend school in these circumstances.

Palestinian Refugees Face a Deepening Humanitarian Crisis

The severe financial and economic crisis hits the already marginalized refugee populations in Lebanon the hardest, as they are unable to secure the most basic life components. For Palestinian refugees this is no longer a crisis but a catastrophic reality that affects all aspects of their lives:

▪         There are less job opportunities including daily work for labourers, and monthly income is dropping (half of the Palestinian households earn less than 500,000 Lebanese pounds per month – around $25 – which is less than the minimum salary). Unemployment has reached record levels according to the Lebanese Labour Minister and it is projected to reach 41% at the end of the year. Add to that the underemployment suffered by most, including Palestinians, due to reduced working hours, the reduction of salaries, or the slowing down of business in the sectors they work in, plus the impact of Covid-19, where most have yet to be vaccinated.

▪         As a result of the economic and financial collapse, reduced job opportunities and the worsening national currency, poverty indices among Palestinian refugees have risen. The current estimates are that more than 80% of Palestinians live under the poverty line (compared to 65% before this crisis in Lebanon). Also, 62% [1] lack food security and the ability to meet their basic nutrition needs, as many households resort to reducing the quality of their food intake, skipping meals, or borrowing to buy food.

▪         95% of Palestinians lack medical coverage and depend on UNRWA and CSOs for healthcare. The collapse of the national currency has led to an increase in the hospitalization bill, reaching astronomical levels that are beyond the means of most Palestinian refugees. Based on studies, more than 70% of Palestinian refugees cannot afford their share of the hospitalization bill [2], the remaining cost after UNRWA covers 30-60% of the bill with a cap of $5200 per surgery. There are around 6,000 people that undergo surgery each year.

“I am 73 years old, and we have never seen days as difficult as these. All of the doors are shut for us, as well as the rising prices that are leaving us hungry, we have water, electricity, and medicine shortages. I live in the dark because I cannot afford the generator fees. I collect water in small pots. My daughter has cancer and her medicine is not available in the market. It’s a catastrophe. We are already destitute, inhabiting very poor houses in alleys that barely receive sunlight or air. Yes, our situation is difficult and today it became even more difficult.”

Imm Khaled – Burj al-Barajneh refugee camp

Lebanon is experiencing prolonged daily power cuts along with diesel shortages and the high cost of diesel when it is available. This has strongly impacted the functions of most organizations in the country including hospitals, schools and even government offices; many are forced to reduce working hours or days, or shut down either permanently or temporarily. The electricity cuts coupled with the shortage of diesel has put vital institutions such as hospitals at risk and hinders urgently needed surgeries. Many hospitals have issued warnings of an impending catastrophe that will affect their patients, especially critical care patients.

Palestinian refugees in Lebanon now face a double crisis: the economic and financial collapse, as well as reduced levels of support as donor funds have greatly reduced. 


[2] – Strategic report 124