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  • December 17, 2019

    RHU panel discussion warns of the painful choices Lebanon has as the economic crisis deepens

    RHU organized a panel discussion on December 4, 2019 to create awareness about the economic crisis in Lebanon that continued to deepen and downgrade Lebanon’s credit ratings. Held outdoors in the green area on December 4, 2019, the discussion was delivered by RHU faculty members, Dr. Jamil Hammoud, Dr. Mohamad Tarabey, and Dr. Jamil Chaya and moderated by Dr. Houssam Salami. The esteemed speakers provided credible and accurate analysis of “Lebanon's Economic & Financial Situation: A Crisis of Confidence and Liquidity.”

     

     

    After a brief introduction by associate professor Dr. Houssam Salami, Dr. Mohamad Tarabey, Chair of the Financial Studies Department, began the discussion with a historical review of the economic situation that Lebanon has gone through since 1990.

     

    He pointed out that “understanding errors is necessary to determine solutions in a country that has relied primarily on remittances from its diaspora to maintain steadiness in public finances; however, months of political turmoil has undermined greatly the confidence of depositors and bond investors forcing the authorities to wade deeper into a more shattering economic and financial situation.

     

     

    In his part of the discussion, Dr. Jamil Hammoud, Professor and Dean of the College of Business Administration, distinguished between the economic crisis and the financial crisis. While economic crisis results mainly from a rentier economic system, is deep rooted and necessitates long term reforms, the financial crisis is a result of a liquidity crunch, public debt and declining central bank's reserves.

     

    Dr. Hammoud indicated that the “government, the central bank and the banks are all responsible for the current financial crisis.” Fear and lack of confidence are causing a bank run among depositors who already withdrew about 4 billion dollars. Transferring about 9 billion dollars by the banks outside the country is irresponsible. The banks must be pressured to return those funds back into our banking system before anything else.

     

    Finally, Assistant Professor Dr. Jamil Chaya indicated that one unarguable aspect of the social movements that have swept the nation is “an awakening of the population to economic, financial, and governance issues.” A population that has long been asleep is now awake; they are scrupulous and cynical and from this has emerged the importance of self-motivated education.

     

    He discussed what choices we have as a nation moving forward indicating that there are many options, but each is more painful than the other. “We will get out of it but it will be painful, and probably take a few years,” he said. He added that at the end of the day, monetary policy has been drawn thin, the financial engineering being the last straw. The reforms that must absolutely be implemented have always been fiscal reforms that are capable of reinstating trust. “At the end of the day, this crisis is one of trust, a lack of trust in government institutions, a lack of trust in the financial sector, a lack of trust from foreign aid, and a lack of trust in political parties. Trust is what needs to be addressed and as we all know, trust is a very fragile thing that can be lost in an instance and can take decades to be rebuilt.” His talk then explained several measures that could be taken independently or in tandem to address the issue of the nation.

     

    At the end of their deliberations, the speakers answered many questions from the large audience of faculty, staff and students attending the event.

    View the video of this event.

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