High cost of living in Lebanon caused by lack of public services: economists

Source: Xinhua| 2019-08-11 23:53:40|Editor: yan
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BEIRUT, Aug. 11 (Xinhua) -- Lebanese economists attribute the high cost of living in Lebanon to poor infrastructure and the lack of proper public services.

"There are no proper basic public services in Lebanon. The state of infrastructure is a major burden on the economy and it constitutes a major cost for households and businesses," Nassib Ghobril, economist and head of the economic research department at Byblos Bank, told Xinhua.

Ghobril explained that the Lebanese have to pay double bills for some of the government's services including electricity and water, in addition to high fees for telecom services.

"If we had proper electricity services, people would have paid only one bill. But with weak power generation offered by the government, citizens have to resort to illegal and private generators and thus they end up paying an electricity bill for the government and the other for private generators owners," he said.

It is the same with water, Ghobril noted, as citizens barely have proper access to the government's water supply but still have to pay for it.

Ghobril added that the cost of telecom services, for instance, is too high in Lebanon because the sector is under the government's control.

"When a sector is managed and regulated by the same entity, which is the state in this case, the result will translate into poor services and a big burden on the economy instead of being a factor of competitiveness for the economy," he said.

Ghobril insisted that Lebanon is not a poor country but the government's neglect to provide efficient services to citizens resulted in the high cost of living compared to other countries in the world.

The World Bank classifies Lebanon as an upper middle-income country. The GDP per capita in Lebanon stands at 10,000 U.S. dollars, which is considered good compared with other countries, he said.

Ghobril also noted that one very important factor contributing to the rise in cost of living in the country is high taxation.

"We have very high taxes because the government needs to continue financing the welfare of the state which is the public sector," he said.

According to Byblos Bank's "Lebanon This Week" publication, the mid-2019 Cost of Living Index produced by global database Numbeo, ranked Beirut the fourth-highest among 21 Arab cities and 157th among 377 cities around the world.

Also, the cost of living in Beirut was the highest among 99 cities in upper middle-income countries included in the survey.

Layal Mansour, economist and researcher at the Lebanese American University, believes that one of the factors contributing to the high cost of living in Lebanon is the lack of a proper transportation system which prompts citizens to buy cars that incurs additional cost.

Mansour said that Lebanon does not offer free educational and hospitalization services similar to European countries.

"In Lebanon, we pay around 6,000 U.S. dollars of school fees per child on a yearly basis while education in France is free for example," she said.

She also noted that food and beverages are expensive in Lebanon, which is related to the cost of investment.

"Investors who operate in food and beverages, including restaurants and supermarkets, tend to add a somewhat high profit margin to their sold items for them to cover their expenses and generate a revenue that is higher than the interest rate on deposits offered by banks," she said.

Mansour explained that investors want to make sure that they have good return on their investment, otherwise they would deposit their money in banks and generate revenues.

She added that high remittances sent by Lebanese expatriates overseas also have a negative impact on the overall cost of living in Lebanon, particularly on the cost of real estate.