Zaytouna Bay by Rashid khreiss on Unsplash

Lebanon Economy Overview Part 2

Asia

Lebanon needs the equivalent of just under 1.9 billion euros over the next three years to cope with the consequences of the civil war in neighboring Syria. Millions of refugees have to be supplied with food, electricity and schooling. In addition, the spillover of the fighting to Lebanon and the participation of Lebanese in the Syrian civil war have resulted in a painful decline in income from tourism. Every second Lebanese between 15 and 34 is unemployed, which has a massive impact on health, education and the social system. More than a million Lebanese already live in poverty. The World Bank expects that 170,000 more people could slip below the poverty line as a result of the poor economic outlook. The international community wants to provide more than 11 billion USD (approx. 9 billion EUR) in low-interest loans and donations for crisis-ridden Lebanon. This was the result of the Paris CEDAR conference which took place in April 2018. However, the promised funds are tied to the implementation of urgent reforms that can only be tackled with the new government, but the government has so far failed to implement urgently needed reforms. The attempt, as requested, to increase tax revenue in the 2019/20 budget planning threw Lebanon into an economic and financial crisis. Under pressure from the protesting population, the Prime Minister even resigned, and the resulting political crisis led the country to a dead end. It is not yet possible to predict how the situation will develop. The prices of government bonds have lost 30 percent of their value since the beginning of the year.

If the financial markets continue to withdraw confidence in Lebanon, Lebanon will not be able to avoid a state bankruptcy.

The Central Administration of Statistics (CAS) publishes important data and statistics. You can also learn more important facts about the economy of Lebanon from the following links:

  • The World Bank: Lebanon
  • IMF: Lebanon
  • GTAI: Lebanon
  • Index of Economic Freedom: Lebanon

According to internetsailors, between 1992 and 2013, the population resident in Lebanon increased by an estimated 25%, from approximately 3,500,000 to 4,200,000 people. Half of the population is under 29 years old, with very high youth unemployment. About 28% of the people in Lebanon live near or below the poverty line. The creation of jobs and the improvement of living conditions are therefore a central challenge for the country and are the focus of the Lebanese development strategy.

Zaytouna Bay by Rashid khreiss on Unsplash

In the development strategy “Status and Visions” drawn up in 2012 with the participation of civil society actors, the Lebanese government describes several fields of action that must be addressed for sustainable development. This includes good governance, strengthening civil society, increasing sustainable production in all sectors: agriculture, industry and services, fighting corruption and nepotism. To achieve these goals, a 7-point action plan for social and economic reforms was presented:

  • Managing public debt and financial reform
  • Revitalization of the private sector
  • Infrastructure improvement
  • Development of man
  • regional and rural development
  • Administrative reform
  • other supporting factors.

With regard to the Millennium Development Goals, Lebanon has so far not been able to achieve sustainable progress in all areas of action. This applies in particular to the goal of halving extreme poverty and hunger and to the area of improving environmental indicators.

To what extent Lebanon will be able to achieve the Sustainable Development Goals by 2030 is more than questionable today. Because important decisions cannot be made at the moment, as the government has no de facto strategic powers, but rather manages the power vacuum in the country.

German development cooperation

In the course of the Syrian crisis, Lebanon was temporarily re-added to the list of cooperation countries with which Germany is working on development policy within the framework of thematic and regional programs. The aim is to improve the supply situation for refugees and the local population in the host communities in order to stabilize the situation and prevent conflicts. On the list of recipients of German development aidIn the last 10 years Lebanon has been in 72nd place. The German government funds for development cooperation, which the Federal Republic of Germany pledged within the framework of intergovernmental agreements, amount to 825 million euros since 2012. With these funds, the BMZ primarily supports United Nations programs, for example the UN Development Program (UNDP) and the Children’s Fund (UNICEF). Substantial financial contributions are also made available for food aid from the World Food Program (WFP). This is where Lebanon benefits from projects by the German BMZ. The Federal Republic of Germany has also been very active in Lebanon for many years in the area of promoting vocational training. In German-Lebanese cooperation, the following programs and projects have been agreed:

  • Promote vocational training and the development of small and medium-sized enterprises (SMEs). Support in reforming the water sector
  • Civil Peace Service (ZFD)

GIZ’s cooperation partners in Lebanon are:

  • KfW Development Bank
  • Federal Institute for Geosciences and Natural Resources (BGR)
  • Forum Civil Peace Service (forumZfD)

In addition, many German institutions that are active in the areas of development cooperation and promoting democracy are represented in Lebanon:

  • German Society for International Cooperation in Lebanon (GIZ)
  • Orient Institute
  • Friedrich Ebert Stiftung
  • Konrad Adenauer Foundation
  • Heinrich Böll Foundation
  • Friedrich Naumann Foundation
  • Rosa Luxemburg Foundation
  • Meeting center Dar Assalam

The focus of the cooperation is on the areas of basic education and vocational training, water supply and sanitation as well as the improvement of living conditions for Syrian refugees and needy Lebanese in the host communities. The measures of the civil peace service relate to Lebanese society, Lebanese-Palestinian relations and interdenominational exchange in Lebanon.

Foreign development cooperation (bilateral and multilateral)

The World Bank, the United Nations Development Program UNDP and the European Union are the most important partners and donors of Lebanese development cooperation.