Lebanon’s government, citizens and businesses, may face an economic free fall

Most recently the Le Mall franchise announced the closure of their Sin el Fil mall by March, which would leave hundreds of workers out of employment.
by TK Maloy

27 January 2020 | 14:47

Source: by Annahar

  • by TK Maloy
  • Source: Annahar
  • Last update: 27 January 2020 | 14:47

A sign is seen on a broken shop glass of Beirut Souks, a 100,000 sq. meters gigantic shopping mall, in downtown Beirut, Lebanon, Friday, Jan. 24, 2020. (AP Photo)

BEIRUT: From small to large businesses closures and staff cuts, Lebanon’s economy is showing increasing signs of “free-fall.”

It’s not hard to notice walking down a suburban village street the increasing number of closed small businesses, making for a portrait like a jagged group of teeth, with many missing. The average high street shopping from Jal el Dib to Beirut Souks features closed eateries, boutiques, travel agencies, and gift shops.

But adding to this recently are larger signs of economic deterioration with bigger business closures or warning a service suspenditures, such as global Internet service to Lebanon by Ogero, which cautioned it could not pay the remainder of their international bill for Internet owing to a lack of dollars.

Most recently the Le Mall franchise announced the closure of their Sin el Fil mall by March, which would leave hundreds of workers out of employment.

The scene at the Sin el Fil Le Mall is becoming a common one at all shopping palaces, with a walk through reveals empty coffee shops, empty clothing stores, and rarely seen customers. Around 500 employees are dismissed from their jobs and will be leaving their duties at Le Mall Sin El Fil stores by the end of March 2020.

Acres Holding manages all three Le Mall branches across the country.

One employee, who preferred to stay anonymous, insisted that the retail company owning the store he works for will find new job vacancies in other branches for its employees at Le Mall Sin El Fil branch.

Another employee at Big Star confessed to Annahar that rumors about the shopping center's shutdown have been circulating since mid-2019 and that Acres Holding couldn't reach a common ground with the Hilton Beirut Habtoor Grand Hotel concerning the rents' curtailment.

"We're being paid half our salaries for four months and now we're expected to go home in two months, without any help from the store's management in finding other job vacancies or moving to other branches of the store," he noted.

A cashier at one of the mall's shoe stores specified that a notifying email of the abrupt dismissal landed in her inbox on January 10, giving her and her mates less than two months to find other jobs, or else they will end up without an income.

"Customers are nowhere to be found around here. The current economic situation is in a free fall," she said.

Le Mall has three branches in Dbayeh, Sin el-Fil, and Saida. Plans for Dbayeh and Saida have not been announced as of yet.

In early January, Ogero, the backbone company that provides Internet connectivity to a number of subcontractors in Lebanon warned that it might not be able to pay the $4 million required for connection to the World Wide Web. Ogero Chairman Imad Kreidieh said Monday, January 13, that he would meet with Bank governor Riad Salameh to discuss the issue of a possible Web disconnection and the shortfall of dollars to pay the bills.

No statement was issued from the meeting.

In an interview with TV broadcaster Al-Jadeed the Ogero chairman said the key issue was having access to sufficient dollars to pay for Net access.

Via Twitter on Jan. 13, the Ogero chief said that barring a timely repayment Internet would be cut by end of March: “The fact is we are facing tremendous pressures from our suppliers to secure [foreign currency]. It’s pure and simple,” Kreidieh.

In other negative news, Lebanon briefly lost its voting rights in the United Nations over two years of unpaid dues. The news was sufficiently embarrassing on the international stage and yet another symbolic blow to confidence in Lebanon, that the dues were quickly paid off.

The Banque du Liban’s plan for a Eurobond swap with banks and foreign holders to lengthen the maturity and delay a $1.2 billion payout slated for March 9 fell apart precipitously after foreign holders and banks rejected the plan. Additionally, Fitch ratings said that such a plan would still leave Lebanon in technical default of its sovereign debt. Lebanon owes three large bond payments this year, which its current account will be able to meet, but will leave the central bank with very little left in dollars for further debts owed going forward into next year.

Toby Iles, a Director at Fitch Ratings, said by email in an interview with Bloomberg, “The proposal by Banque du Liban reflects the external financing stress that Lebanon is under and BdL’s current commitment to conserve its currency reserves and ensure that Lebanon can meet its debt obligations.”

The French embassy in Lebanon distributed last Monday (Jan 21) remarks made by French Foreign Ministry spokesperson Agnès Von Der Mühll noting, “As for the serious economic and social crisis that Lebanon is facing ….the French envoy stressed the urgent need to form a new government that is capable of implementing a credible set of reforms that meet the aspirations of the Lebanese (demonstrators) have expressed during the last three months.”

Between Lebanon’s nearly $90 billion government debt, a declining Central Bank current account, lack of expatriate inflows into banks, the rush by local depositors to extract their money, and thus far no expectations of a foreign multi-lateral bailout, the country looks on the road to large-scale economic collapse.

In the meanwhile, Lebanon is facing a rough year ahead of business failures, increased unemployment, and massive discontent on the street.

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Chritsy-Belle Geha contributed to this article.

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