Lebanon is grappling with the worst economic and financial crisis in its modern history, one that the World Bank has said is likely to rank as one of the worst the world has seen in the past 150 years.

Two boys sell bread along a street following Tuesday's blast in Beirut's port area, Lebanon, August 8, 2020.
Two boys sell bread along a street following Tuesday's blast in Beirut's port area, Lebanon, August 8, 2020. (Reuters)

Lebanon’s Economy Ministry has raised the price of subsidised bread for the fifth time in a year amid the tiny country’s worsening economic and financial crisis.

The ministry said on Tuesday that the reason behind the latest increase is that the central bank has ended sugar subsidies, which adds to the cost of bread production.

Lebanon is grappling with the worst economic and financial crisis in its modern history, one that the World Bank has said is likely to rank as one of the worst the world has seen in the past 150 years.

The World Bank said in a report this month that Lebanon’s gross domestic product is projected to contract 9.5 percent in 2021, after shrinking by 20.3 percent in 2020 and 6.7 percent the year before.

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Plummeting currency

Lebanon’s currency has lost 90 percent of its value, breaking a record low earlier this month of 15,500 Lebanese pounds to the dollar on the black market. The official exchange rate remains 1,507 pounds to the dollar.

The central bank has been cutting back on subsidies as foreign currency reserves have dropped from $30 billion at the start of the crisis in October 2019, to nearly $15 billion at the present time.

Most Lebanese have seen their purchase power drop and more than half the population now lives below the poverty line.

There are severe shortages in gasoline, medicines, and other vital products. Electricity cuts last for much of the day.

The government in June last year raised the price of flatbread, a staple in Lebanon, by more than 30 percent – for the first time in a decade. It has since raised the price three times before Tuesday.

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Source: AP