The vast majority of food and fuel in Lebanon is imported and the majority of Lebanon’s wheat is imported from Ukraine and Russia.
According to the Mercy Corps-affiliated Lebanon Crisis Analytics Team, wheat flour prices have skyrocketed 209% since the start of Russia’s conflict in Ukraine, and 330% since the start of the current economic crisis.
The annual rate of food and beverage inflation for June jumped to 332% and the inflation rate for the entire month reached 210%, as per the government data.
Amin Salam, Lebanon’s Minister of Commerce and Industry, explained to Hadley Gamble of CNBC “we realized that there was a threat way before we got to the Russia-Ukraine crisis, we knew that the country should have had another set of silos around the country to make sure if something happens, we don’t lose our reserves.”
Because of the Beirut port explosion two years ago, Lebanon’s wheat silos were completely destroyed, significantly affecting the country’s emergency reserves.
According to Amin Salam, Lebanon’s caretaker government is now struggling to procure wheat from any available source, including talking to the Russians.
“I know that the government, through the Minister of Foreign Affairs have had several discussions about supporting Lebanon and opening up some of the shipment lines that are blocked, because we are having a hard time really receiving shipments that used to take 10 days, now they take three weeks.”
Salam claimed that following these meetings, his government had “not received any positive feedback.”
The World Bank is a lifeline
The World Bank, this past May, approved a $150 million loan for Lebanon, which was approved in Parliament Tuesday. The loan that was given to Lebanon “aims to finance immediate wheat imports to avoid the disruption in supply over the short term and help secure affordable bread for poor and vulnerable households including displaced population and refugees in Lebanon,” Through email, the World Bank informed CNBC.
“The project will also help strengthen the governance capacity in the wheat sector and help put the agriculture and food production system on a pathway toward recovery and greater resilience.”
Depending on global wheat prices, Salam predicts that the World Bank loan will last six to nine months.
“So far the price has been going down,” Salam said. “The estimate is that this loan will serve the country for about eight months of supplies.”
As for Lebanon, Salam said he hopes the situation will be better in eight months, possibly even a $3 billion loan from the IMF, which the government will have obtained — something long promised and still not granted.
The IMF loan comes with various strings attached which, for the most part, the government has yet to enact.
“We had no other option than to seek help from the international community. The World Bank was very responsive, very fast,” Salam said.
Salam informed CNBC that the conversations lasted about 25 days, and the loan “was the fastest and the first granted to any country globally that is related to food security from the World Bank.”
The World Bank cites Lebanon’s economic decline as one of the “top 10 severe crises globally since the 19th century.”
The World Bank has classified Lebanon as a lower middle-income economy once again. Since 1998, Beirut has not fallen in such rankings.
As per the World Food Programme, “22 percent of households in Lebanon are food insecure,” as well as the number of “Syrian refugees who are severely or moderately food insecure stands at 1.3 million, of whom 1 million are receiving assistance.”