World Bank: Lebanon is in the Midst of Economic, Financial and Social Hardship, Situation Could Get worse
Regional Director Meets President Aoun to urge quick and strong measures to restore confidence in the economy
In a meeting with President Michel Aoun today (November 6, 2019), the World Bank Group reiterated its unequivocal support to the people of Lebanon, who are facing high-risk situation of economic, financial and social uncertainty.
“We found, His Excellency, the President, very attentive to our concerns with deteriorating social and economic conditions of Lebanese people,” World Bank Regional Director Saroj Kumar Jha said After the meeting. However, now Lebanon does not have the luxury of time to waste to redress issues that need immediate attention.
“I met with the president to urge swift and timebound measures to ensure Lebanon’s economic and financial stability. The politics has most attention, but economy has the most risks,” said Jha. “With every passing day, the situation is becoming more acute and this would make recovery extremely challenging.”
Jha said that the World Bank had earlier projected a small recession in 2019: negative growth of about (-) 0.2%. Now, we expect the recession to be even more significant due to increasing economic and financial pressures. Balance of payments constraints are leading to dire conditions for businesses and workers. Declining confidence in the economy is also causing higher dollarization of deposits, which impose a heavy toll on balance sheets of banks and central bank.
By 2018, about a third of the Lebanese are estimated to have been in poverty, this was up from 27.4 percent in 2011-2012. And what’s coming can be worse if not addressed immediately:
- Poverty could rise to 50% if the economic situation worsens;
- Unemployment especially among youth is already high but it could further rise sharply
International experience suggests that in economic crises, both the poor and middle class can be hurt disproportionately, and here’s where the new government should intervene swiftly to protect these people against negative effects of adjustments. There is an urgent need to stop the emerging economic crisis and restore confidence in the economy.
The World Bank has no political agenda or mandate. But we have a duty to alert our partners when we see them in difficult situations. We must arrest further degradation of Lebanese economy and its social consequences. Rapid government formation that meets the expectations of all Lebanese people is the most urgent step. But that’s only the first step.
“It is even more important is to focus on stability and growth factors by time bound action to address the growing external imbalances, improving growth prospects through investments and job creation, redress social inequities, fighting corruption and ensuring transparent and accountable government,” said Jha.
World Bank has been a longstanding partner of Lebanese people and working closely with members of the international community, we stand ready to extend all possible support to the new government that commits itself to good governance and creating opportunities for all Lebanese, specially the youth and women.
