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World Bank accuses Lebanese politicians of cruelty over deposit promises

People queue to get bread outside a bakery in Beirut, Lebanon July 27, 2022. REUTERS/Mohamed Azakir

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BEIRUT, Aug 3 (Reuters) – THE PLANET Bank accused Lebanese politicians to be cruel by asserting that deposits in the country’s collapsed banking sector are sacred, saying such slogans “flagrantly contradict the truth” in a written report on Wednesday.

Lebanon is in the 3rd year of a financial meltdown which has left eight in ten people poor and that your World Bank says is deliberate and could be among the three worst today.

The brand new report marked the next time this season the planet Bank has berated Lebanon’s ruling politicians, having accused them in January of “orchestrating” the country’s catastrophic economic meltdown through their exploitative grip on resources.

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The collapse has frozen depositors out of savings in the paralysed bank operating system, and led the neighborhood currency to reduce a lot more than 90% of its value.

“Political slogans for the sacrosanct of deposits are hollow and opportunistic; actually, the constant abuse of the term by politicians is cruel,” the planet Bank said in a written report.

“Not merely does it flagrantly contradict reality, it prevents answers to protect most, or even all small and medium depositors, in dollars and in cash,” the report said.

Lebanese politicians often say depositors’ rights should be preserved in virtually any intend to address losses of some $70 billion in the economic climate, even while their savings have lost around 80% of these value because of the collapse.

“Losses must have been accepted and carried by bank shareholders and large creditors, who’ve profited greatly during the last 30 years from the very unequal economic model,” the planet Bank said.

“This will have occurred at start of the crisis … to limit the economic and social pain.”

Lebanese banks lent heavily to hawaii, which wracked up huge debts largely because of corruption and bad governance. THE PLANET Bank report said “a substantial portion” of individuals savings have been “misused and mispent in the last 30 years”.

The former government drew up an idea to handle the losses in 2020, nonetheless it was torpedoed by sectarian factions which have the ultimate say in Beirut, and objections from the banking sector and the central bank.

A fresh plan approved in-may has also come across objections.

The International Monetary Fund wants Lebanon to approve a banking restructuring plan as you of a listing of preconditions to go forward with a draft funding agreement.

THE PLANET Bank report questions from what extent authorities met financing needs by way of a Ponzi scheme – a kind of scam that pays back investors with money from new investors.

The sooner necessary “reforms will undoubtedly be initiated, the less painful the expense of Ponzi Finance will undoubtedly be on the Lebanese people”, it said.

A Lebanese government spokesperson didn’t immediately react to a obtain comment.

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Reporting by Timour Azhari and Tom Perry; Editing by Toby Chopra, Alexandra Hudson

Our Standards: The Thomson Reuters Trust Principles.

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