Lebanon’s Multifaceted Economic Crisis of October 2019: Causes, Repercussions- A Diagnosis

The paper analyzes Lebanon’s extraordinary economic breakdown of October 17, 2019 when the Central Bank suddenly imposed effectively de facto capital controls on Lebanon’s prevailing free foreign exchange market since its independence in the late nineteen forties. This action has since led to a major economic and financial crisis: the emergence of a parallel market with a depreciating pound, alongside a few additional official rates designated for particular transactions, rapid inflation, business closures, rising unemployment, deeply declining GDP, and an accelerating rate of emigration of professionals, among others. The paper analyzes the root causes of the crisis, its economic manifestations, and the failure of public and private sector responses during the follow up period through June 2022. It draws attention to three crucial aspects of economic and financial reform that Lebanon would need to implement to assure its sustained recovery.