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Damage caused by Beirut explosion runs into “billions”, central bank to offer interest-free loans

The damage caused to the Lebanese capital in the explosion of the port of Beirut on Tuesday, which left more than 135 dead and displaced some 300,000 people, amounts to “billions” of dollars, the country’s central bank said on Wednesday.

Bank to approve interest-free loans for five years to individuals and businesses whose assets have been destroyed, central bank official told CNBC Hadley gamble. It will also sell dollars to all importers of aluminum, wood or glass at the rate of 3,900 Lebanese pounds per dollar, well below the black market rate of over 8,000 pounds to the dollar.

Lebanon is currently facing the worst financial crisis in its history, and it was the case before the explosion and the coronavirus pandemic. The country’s currency remains officially pegged to the dollar, but this is an artificial peg, set at 1507.5 Lebanese pounds per dollar since 1997. Years of excessive sales of dollars by the central bank to support the Lebanese pound as well that a myriad of other financial mismanagement and the surge in foreign exchange debts caused their real value to plummet and left the country virtually devoid of dollars, essential for importing goods.

A man checks the damage at this heavily damaged old Lebanese apartment building in Beirut’s trendy Mar Mikhael neighborhood on August 6, 2020 following a massive explosion in the Lebanese capital.

Patrick Baz | AFP | Getty Images

The country was already struggling to import food and basic items – and imports account for 80% of its food needs.

Lebanese banks placed restrictions on withdrawals, leaving residents stranded in their bank accounts, and those who saved in local currency saw their lifelong savings wiped out. The crisis raises the question of how Lebanon will now rebuild itself after its ability to import supplies was already threatened.

Beirut residents in shock and mourning after the huge explosion at the city’s port tore up miles of surrounding homes and businesses and injured more than 4,000 people. Hospitals are overwhelmed, some too damaged by the explosion to function.

A before (L) and after satellite image after a massive explosion in Beirut, Lebanon.

Source: Planet Labs

The explosion was originally blamed on 2,750 tonnes of ammonium nitrate stored in an unsecured warehouse for the past six years at the cargo port of Beirut. But the government later announced an investigation to determine within five days the exact cause of the explosion and “who was responsible.”

The Lebanese cabinet said on Wednesday that all port officials who have overseen storage and surveillance since 2014 have been under house arrest, Reuters reported citing ministerial sources.

Many countries have offered to help Lebanon, including France, the United States, the United Kingdom, the United Arab Emirates, Qatar, Iran, Jordan, Kuwait and, more unexpectedly, Israel – with whom Lebanon has no diplomatic relations.

—Hadley Gamble of CNBC contributed to this article.

Garry Johnson

The author Garry Johnson

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