The World Bank will dispatch $300 million in additional financing for the most vulnerable families in Lebanon, a country mired in what the lender called one of the worst economic and financial crises in history.
The package will expand and extend cash transfers to 160,000 poor households for 24 months and support the development of a “unified social safety net delivery system” in Lebanon, the Washington-based lender said in a statement.
With a crashing economy, the assistance being offered is a fraction of what Lebanon needs to cope with the meltdown that pushed three quarters of its population into poverty. Efforts to secure a bigger financial commitment from abroad have faltered, leaving Lebanon’s economy in free-fall after a banking crisis emptied the government’s coffers and forced it to default on $30 billion of international debt in 2020.
A massive depreciation of the currency has exacerbated the plight of the Lebanese by wiping out their life savings and eroding salaries. This year, Lebanon’s first official devaluation in a quarter century made the pound the worst-performing currency globally.
Lost 15 years
The World Bank estimates Lebanon’s real gross domestic output has contracted by almost 40 per cent since 2018, erasing 15 years of economic growth. Annual inflation approached 270 per cent in April.
In response, the World Bank has been working on improving Lebanon’s social safety net, especially as the government moved to lift subsidies on fuel, food and medicines that helped people make ends meet.
The new package is part of a program originally approved in January 2021 to help Lebanon manage the fallout of both the economic crisis and the pandemic.
The funding “will enable the government of Lebanon to continue to respond to the growing needs of poor and vulnerable households suffering under the severe economic and financial crisis,” said Jean-Christophe Carret, the World Bank’s Middle East country director.
The Mediterranean country lacks a comprehensive and inclusive social protection system that provides its citizens equal access and opportunity, the World Bank said. Going forward, Lebanon would need to secure the fiscal space necessary to finance social protection needs.