Beirut: Despite one of the highest rates of public debt anywhere in the world—nearly $75 billion, which represented 120% of GDP in late 2013—Lebanon still held 140 billion in bank deposits. In addition, Beirut boasted the largest gold reserves in the Middle East and North Africa with $9.5 billion worth at the end of 2013, and while these reserves represented 1.1 percent of the world’s total gold holdings, they denoted a whopping 30 percent of the MENA region’s total. Remarkably, and away from political decisions that were mired in classic mismanagement and unending bickering, Beirut’s gold reserves stood at 28 percent of GDP at end of 2013, which ranked it in first place among 105 countries worldwide.
Year in and year out, and as confirmed by Central Bank governor Riad Salameh, the country benefitted from about $7-8 billion in remittances transferred by Lebanese toiling overseas, which accounted for the healthy banking sector, even if predators lurked all around.
Notwithstanding this wealth, part of the Lebanese enigma is the perception that many have of money, abundant for the privileged who wallow in large sums and who flaunt it at will, scarce for those trying make ends meet. Salaries are generally low, with the minimum legal monthly wage at $466, although many earn above that sum. In 2013, a World Bank analysis estimated that 15% of the Lebanese lived below the poverty line earning less than $2,500 per year, and while 54% enjoyed the status of a moderate middle class ($9,000 annually), 32% were classified in the upper middle class ($15,000 - $27,000 annually). Only 7% were considered rich, or in the highest upper class, with an income of $30,000 and above.
These numbers do not explain how the Lebanese manage their finances, how they plan for the future, and whether they know which financial instruments to use. Inasmuch as such questions determine the financial health of a nation, insights into these questions confirm how, despite years of internecine, regional, proxy, and global wars, the Lebanese managed to achieve $9,143 per capita income in 2012, up from $648 in 1970. Even after inflation was factored in, this was a remarkable achievement, especially when one took note that at least 150,000 otherwise productive members of society were killed in the 1975-1990 civil war.
Still, while pure luck ought not be discounted for the relative prosperity of the 5 million citizens (in addition to the 3 million refugees and foreign workers that made Lebanon home), the average Lebanese struggled to master the intrinsic knowledge to handle money. According to a recent report published in French under the title “Les Libanais et l’Argent,” the Lebanese were poor planners but knew how to make deals and survive.
Amazingly, nearly half of all Lebanese (47%) did not budget their expenses, although women fared better as 58% understood that they needed to manage their weekly or monthly expenditures. Much like counterparts in other parts of the world, 42% of Lebanese women tended to have detailed financial ideas of what they should spend their money on, while 66% of men relied on partial preparations or simply fell back on their instincts.
Given the tendency to show-off, which meant spending more than what one earned, 58% of middle and lower-middle class households run short of money to cover their essential monthly expenditures. This created its own set of dilemmas since deficits were made up by borrowing from family or friends (53%) while 33% reduced expenditures on essential items.
One of the most intriguing parts of the survey examined how the Lebanese perceived the future and what kind of plans they made to prepare for it. Among those 60 years and younger still active in the workforce, a third (32%) had neither a retirement plan, nor even thought about creating one. Two-thirds (69%) were not aware that the country’s social security system did not provide retirement plans and only guaranteed access to medical care for those who worked in the public sector. The exception to this rule was for the military and although professional organizations, like lawyers or physicians associations had their own programs in place, a large segment of the population was not covered. Many lived for the day, putting off essential preparations for their golden years.
The study, based on a 2012 survey of 1214 households from across the country representing all Muslin and Christian denominations, was undertaken by the “Institut des Finances Basil Fuleihan” [named after the former Minister of Economy and Trade who died from his wounds sustained in the February 14, 2005 bombing that killed Prime Minister Rafiq Hariri and 21 others], at the Ministry of Finances (with International Monetary Fund collaboration). It showed that the Lebanese were not as good with money as many assumed, with a large portion of the population without a strategy to make ends meet that, in turn, enlarged the gap that existed between the haves and the have-nots.
