JUDY WOODRUFF: For years, Lebanon has been a financial house of cards. Its debt is one
of the world's largest per capita.
Now the foundation of that house is giving way. Add in a global pandemic, and the result
is a gathering perfect storm.
Special correspondent Jane Ferguson reports from Beirut.
JANE FERGUSON: Beirut is famous for its bars, restaurants and cafes, a mixture of Arab and
Mediterranean hospitality.
But the government has now ordered everything here shut, in an attempt to contain COVID-19.
Only grocery stores, bakeries and pharmacies can welcome customers.
SIHAM PERHAM, Shop Owner: It's very difficult.
JANE FERGUSON: Yes.
SIHAM PERHAM: We don't know. Maybe next week, we cannot open the shop, they will take a
decision to close all the shops.
JANE FERGUSON: Siham Perham opened this small corner store 37 years ago. Yet, she says business
has never been this bad.
SIHAM PERHAM: Everyday, everything is becoming worse. And at the end, we have the corona.
This was the full stop of everything.
JANE FERGUSON: So far, fewer than 100 cases have been announced here, but that number
is expected to grow.
On Sunday, the government declared a state of medical emergency, and from midnight tomorrow,
the country will go into lockdown, with its international airport shut for at least 12
days. Police are chasing people away from public spaces, like the seafront. And schools
have been shut for two weeks already.
The president, Michel Aoun addressed the nation.
MICHEL AOUN, Lebanese President (through translator): Each of us is called upon to continue his
work from home in the way he sees appropriate, so that the students will be able to study,
and workers will be able to work, and our institutions to remain alive and efficient
as much as possible.
JANE FERGUSON: The coronavirus couldn't come at a worse time for Lebanon. The country is
already in a deep recession. And for many businesses like this, this will be the final
straw.
Lebanon is facing its worst economic disaster in decades, and a banking crisis threatening
the livelihoods of millions. Last week, the country defaulted on its debts for the first
time in its history.
Prime Minister Hassan Diab broke the news in a televised speech.
HASSAN DIAB, Lebanese Prime Minister (through translator): Our reserves have reached critical
and dangerous levels. Today, we are paying the price for the mistakes of past years.
Must we bequeath them to our children and the coming generations?
JANE FERGUSON: Not even during its devastating civil war from 1975 to 1990 was Lebanon unable
to repay its debts.
Now, after decades of mismanagement and corruption, the country is the third most indebted in
the world.
MIKE AZAR, Former Lecturer, Johns Hopkins University: The country imports a lot and
barely exports. You have to finance that gap. And it's been financed in Lebanon using the
dollars that have been sent by the Lebanese diaspora to Lebanon. Over the years, that
money has been spent to finance the imports.
JANE FERGUSON: Mike Azar is a former economics lecturer at Johns Hopkins University.
MIKE AZAR: So now you have this huge balance of dollar deposits in the system, but those
dollars have all been spent to finance either the trade deficit, the government fiscal deficit.
JANE FERGUSON: Since the end of the war here, this unorthodox method of balancing payments
seemed to be working to hold the country's finances together, for a while at least. But
those dollars from Lebanese people living abroad slowed down in recent years.
For one, the conflict in neighboring Syria crippled the economy in Lebanon. Also, a downturn
in oil prices means a lot less money being sent home by Lebanese migrants working in
the Persian Gulf.
MIKE AZAR: Once those dollars stopped flowing, the central bank had to offer higher and higher
interest rates to attract those deposits.
So, in the U.S., at a time when people were earning zero percent, 1 percent on their deposits,
in Lebanon, you could earn 6 to 8 percent on your dollar deposits.
JANE FERGUSON: But it was little more than a Ponzi scheme. And now the central bank can't
balance the books.
In the country's second largest city, Tripoli, volunteers hand out food to the poor, filling
a gap where the government refuses to help. These people created a soup kitchen for the
most desperate.
Now even this charity work has stopped to prevent the new coronavirus from spreading.
Helping people with food handouts could put them at risk. And for a million-and-a-half
Syrians here, many surviving in miserable refugee camps, the global pandemic adds a
new layer of fear to their hardships.
AHMED MAHMOUD, Syrian Refugee (through translator): We heard from the TV about corona. We are
afraid now if a child coughs or sneezes. We have 80 tents, and in each tent, there are
four to five people. It would be catastrophic if it spreads here.
JANE FERGUSON: Parents in the camp worry how they will afford treatment if their kids get
sick. Lebanon has no real public health care system.
JUMA'A AL ALI, Syrian Refugee (through translator): If we go to the hospital, they won't let us
take our kids in unless we pay. If you have money you are welcome. If you don't have money,
you are not.
JANE FERGUSON: Lebanon has long faced a multitude of calamities, but this wave of new disasters
is the greatest test of its resilience for decades.
The generations here who have survived war and political crises now face an unprecedented
set of challenges that only continue to get worse.
For the "PBS NewsHour," I'm Jane Ferguson in Beirut, Lebanon.