Lebanon’s tanking economy increasingly cash-based: World Bank

Lebanon’s tanking economy increasingly cash-based: World Bank

The World Bank has warned that nearly half of crisis-hit Lebanon's economy is now cash-based as trust in banks has plummeted, heightening money laundering risks and slashing hopes for recovery.

Lebanon has been mired since 2019 in an economic crisis that the World Bank has dubbed one of the worst in modern history, as the currency's market value has fallen by at least 98 per cent against the dollar.

As a result, the cash economy has nearly doubled in size from 26.2 per cent of gross domestic product in 2021 to nearly half of GDP last year, the Washington-based body said in a report Tuesday.

"A pervasive and growing dollarised cash economy is a major impediment to Lebanon’s economic recovery," the report warned.

The trend has adverse implications on "fiscal and monetary policy, significantly heightens the risks of money laundering, increases informality and facilitates tax evasion", it added.

The World Bank estimated Lebanon's cash economy to be at around $9.9 billion, or 45.7 percent of GDP in 2022.

"Cash economies make it easier to conceal the source of funds for illicit and illegal activities," it added.





Lebanon's currency plunge has driven price hikes including on fuel, food and other basic goods, with supermarkets pricing items