Lebanon's Deputy Prime Minister Ahmed Shami on Monday announced without warning that "Lebanon is bankrupt and the central bank has lost a lot of money" after Sri Lanka teetered on the brink of bankruptcy due to a severe shortage of foreign currency, goods, high prices and power supplies.
Since 2019, Lebanon has been affected by the Beirut explosion combined with the COVID-19 pandemic (On 4 August 2020, 2,750 tons of ammonium nitrate in a warehouse in the Lebanese capital Beirut harbor exploded, killing nearly 200 people, injuring more than 6,500 and leaving 300,000 people homeless overnight. The explosion caused direct economic loss of 4.6 billion DOLLARS, indirect loss of more than 10 billion dollars), into a serious economic crisis. Even the World Bank has warned that Lebanon's economic crisis is likely to be one of the world's three worst since the mid-19th century.
In 2022, affected by the Conflict between Russia and Ukraine, Lebanon's domestic prices fluctuate sharply again. It should be noted that the country relies heavily on imports, and 60% of the total wheat consumption comes from Ukraine and Russia.
As for the current social and economic situation in Lebanon, some of the buyers' production and operation activities are due to the social unrest in the country and the shortage of dollars in the country, resulting in payment arrears. In addition, under the background of Russia's incursion into Ukraine and the global epidemic, tourism, Lebanon's main source of foreign exchange income, will be further affected.
In view of the current situation in Lebanon, in order to effectively control the risk, it is recommended that all same industry partner:
1. prudence and Lebanon trade activities of the buyer, pay close attention to further implementation of the Lebanese foreign exchange controls, real-time tracking proceeds, the timely payment using the third countries, In addition, strengthen communication with the buyer on the recent shipment arrangement, purchase and payment of foreign exchange, pay attention to the control of cargo rights and shipment pace, and make reasonable arrangements for shipment.
2. Take risk prevention measures for relevant businesses, and timely notify the export credit insurance company of the risk of the buyer.
3. Carefully accept limitation requirements from Lebanese buyer or issuing bank, for export enterprises with long-term trade experience with Lebanon and certain risk control level, if they really have orders, they can carefully accept them based on the credit status of the buyer or the issuing bank and verify the buyer's foreign exchange purchase method and payment route.