Since October 2019, Lebanon has witnessed an economic collapse due to decades of mismanagement and the political class that favors the principle of quotas and transactions at the expense of structural reforms in administrations and service facilities.
As a result of that collapse, which the World Bank has considered the worst in the world since 1850, the lira has lost its value against the dollar, and the state’s ability to provide basic services such as electricity, fuel and medicine has declined due to the decrease in foreign exchange reserves in the Central Bank.
In a report for the Forbes website, which specializes in financial and business affairs, it highlighted the increase in the fortune of Lebanese Prime Minister Najib Mikati within one year to reach $ 700 million to reach $ 3.2 billion , according to Forbes’ list of billionaires for 2022, compared to $ 2.5 billion during last year’s list, while Moroccan Prime Minister Aziz Akhannouch increased his fortune by $ 100 million to record $ 2 billion this year, compared to $ 1.9 billion in 2021.
It comes at a time when both Lebanon and Morocco are suffering from serious economic crises with Mikati taking over the presidency on September 10, while Akhannouch became the prime minister of Morocco in the same month, and the economic situation in the two countries deteriorates in in collaboration with Mikati and Akhannouch who are taking over the presidency Ministers due to the repercussions of the war in Ukraine, although both have previously combined leadership positions in government, corporate governance and business.
Mikati is the fourth richest Arab billionaire for 2022. He is the co-founder of the M1 Group and Akhannouch ranks 14th. He has investments in the oil, gas and chemical sectors through Afriquia Gaz and Maghreb Oxygene, which are traded on the Casablanca Stock Exchange, while excluding the ranking of Arab billionaires. Saudi Arabia, where Forbes has stopped pursuing their fortunes since 2018.
Mikati accepted the Lebanese premiership three times, first in 2005 to oversee the parliamentary elections and then in June 2011, before resigning from his government in March 2013, but he continued his duties as caretaker until mid-February 2014. Between 2007 and 2021, Akhannouch was the Minister of Agriculture and Fisheries in Morocco.
The World Bank expects Lebanon’s GDP to continue to decline by 6.5% this year, while the Lebanese economy will shrink by 10.5% in 2021, while the growth of Morocco’s economy will slow to just 1.1%, compared to a 7.4% increase in real GDP in 2021.
In this report, Forbes Middle East monitors the reasons for the increase in the wealth of Mikati and Akhannouch within a year, as well as the change in the economic situation in Lebanon and Morocco since they took control of the two countries.
Post: Prime Minister of Lebanon
Increase in wealth within a year: $ 700 million ↑
Net worth: $ 3.2 billion
Expected economic growth in 2022: 6.5% ↓
Growth in 2021: 10.5% ↓
Despite the continuing deterioration of the economic situation in Lebanon, with gross domestic product declining by 10.5% last year and expectations of a 6.5% contraction this year, Mikati has raised its fortune by $ 700 million in a year, with the share of the South African company MTN rising by 79% in one year to 12 May / May 2022, to 16 890 rand (about a thousand dollars), in which Mikati owns shares by the M1 Group company which Najib co-founded with his brother Taha.
Lebanon has been suffering from an economic and financial crisis for three years, and it is considered one of the worst crises the world has seen, while the repercussions of the Russian war in Ukraine add new problems for decision makers in Lebanon, according to the World Bank.
Data from the Ministry of Economy and Trade in Lebanon indicate that there is a large dependence on food imports, as 80% of the wheat consumed in the country is imported, while 96% of the total wheat imports are either from Russia or Ukraine, while Lebanon recently announced $ 150 million in World Bank funding to finance wheat imports.
The World Bank has advised Lebanon to look for new alternatives to wheat imports other than Russia and Ukraine to ensure food security stability, noting that high energy prices exacerbate the already existing crises associated with exchange rate pressures, and very high inflation rates, and it is likely to the limited amount of electricity already supplied by Electricité du Liban.
Lebanon reached an expert-level agreement with the International Monetary Fund to obtain $ 3 billion in financing last April, and the final approval of the loan is soon subject to the Fund’s board meeting, and the country is also seeking other international funds. to support its food security during the period.According to the Minister of Economy and Trade, Amin Salam.
The price of the Lebanese pound fell by 113.1% against the dollar within one year, bringing the exchange rate of the US currency to 27.1 thousand pounds on 12 May, compared to 12.72 thousand pounds on the same day last year, according to Lira Rate estimates.
The consumer price index in Lebanon jumped by more than 208% during the month of March, compared to the same month last year, according to the Central Administration of Statistics.
It is noteworthy that the parliamentary elections in Lebanon will be held tomorrow, Sunday, and that the current Prime Minister was elected as representative of the city of Tripoli in 2000, then re-elected in 2009 and in 2018 as representative of Moreover, Mikati has the portfolio of accepted the Ministry of Public Works and Transport in Three consecutive governments between 1998 and 2004.
Post: Prime Minister of Morocco
Increase in wealth within a year: $ 100 million ↑
Net worth: $ 2 billion
Expected economic growth in 2022: 1.1% ↑
Growth in 2021: 7.4% ↑
Akhannouch and his family’s fortune has increased by $ 100 million in a year while he heads the government in his country, in addition to Morocco’s economic challenges during the current period. Moroccan dirhams ($ 482.06), according to data at the end of trading on May 12. available on the Casablanca Stock Exchange The share price of Akhannouch’s Maghreb Oxygene company also rose 66.6% over the same period to 316.5 dirhams ($ 31.2) at Thursday’s close.
Growth in Morocco is expected to slow to just 1.1% in 2022, as the country’s agricultural production declines by 17.3% due to drought, and economic growth is likely to be driven by industrial sector performance and a faster tourism recovery, which will have a greater positive impact on growth economy in the medium term.
The consumer price index rose by 3.6 in February 2022, year-on-year, and this inflationary pressure coincides with the new challenges facing the Moroccan economy in the current period, which is the rise in energy and commodity prices include, especially after the war in Ukraine, in addition to the severe drought wave. .
The war in Ukraine continues to push up global commodity prices, which will lead to an increase in the Moroccan import bill – especially with the severe drought – and public subsidies, which will be reflected in both the current account and the budget deficit.
The IMF believes that the current account deficit in Morocco will increase to 6% this year, compared to 2.9% last year, while total government debt as a percentage of GDP will increase to 77.1% in 2022, from 76, 3% last year.
Inflationary pressures could push the central bank to raise interest rates, especially with global central banks adopting policies to raise interest rates, which will also tighten funding conditions for the public and private sectors.