- About Lebanon
The Lebanese Republic is a mostly mountainous country in Western Asia, on the eastern shore of the Mediterranean Sea. A country with a population of approximately four million, it was created when the French mandate expanded the borders of the former autonomous Ottoman Mount Lebanon district, forming in September 1920 the Lebanese Republic. Lebanon subsequently became an independent country in 1943.
A demographically and geographically highly diverse country, Lebanon follows a special political system known as confessionalism, distributing power proportionally among its various religious sects, of which more than 18 are officially recognized. No accurate numbers on the distribution of the population per sect are available since the last census was conducted in 1932. Its official language is Arabic and French is also widely used. Armenian and English are also widely spoken and understood.
The flag of Lebanon features a cedar in green against a white backdrop, bounded by two horizontal red stripes along the top and bottom. A combination of temperate climate, many historic landmarks and world Heritage sites continues to attract large numbers of tourists to Lebanon annually, despite its periodic political instability.
Economic and Political Analysis
Lebanon has a free-market economy and a strong laissez-faire commercial tradition. Although the government promotes foreign investment, the investment climate suffers from many restrictions, delays and obstacles. The Lebanese economy is service-oriented; main growth sectors include banking and tourism. The 1975-90 civil war seriously damaged Lebanon's economic infrastructure, cut national output by half, and derailed Lebanon's position as a regional banking hub and intermediary trade partner. Following the civil war Lebanon rebuilt much of its war-torn physical and financial infrastructure. However, the increased budget deficits and increasing debt was financed by the consecutive governments since the early 1990s through heavy borrowing, mostly from domestic banks. This led to the growing debt and its debt interests burden. The Government pledged many economic and financial reforms at separate international donor conferences during the 2000s, including those made during the Paris III Donor Conference in 2007 following the July 2006 war. However, the full implementation of the reform measures under Paris III, for example privatization and securitization, was undermined and obstructed because of internal political polarization, which was created after the assassination of late Prime Minister Rafik Al Hariri on 14 February 2005. As a result, policy outcomes fell short of the government's Paris III objectives. Moreover, the July 2006 war by Israel on Lebanon was devastating to the economy. A very promising tourist season and strongly resurgent economic activity were interrupted, employment opportunities reduced and unemployment increased. The direct and indirect cost of the war has been officially estimated at $5 billion, or 22% of GDP. The expected 2006 GDP growth rate of 6% was directly compromised during the war, experiencing an 11-point decline to -5%. Around 850 commercial enterprises in the manufacturing and service sectors were destroyed. Public debt rose to the even less tenable level of 180% of GDP. However, an average growth of 8% for the four years’ period 2007-2010 decreased debt to GDP to 134%. Michel Sleiman was elected President in mid-2008, after the Doha conference that reached a settlement to the May 2008 clashes in Beirut. The National Dialogue process was initiated in order to reconcile the differences among the conflicting parties and agree on a national defense strategy. Five month after the parliamentary elections that were held on 7 June 2009, the new cabinet led by Prime Minister Saad Hariri was formed on 9 November 2009. However, in early 2011, this government collapsed over its backing of the Special Tribunal for Lebanon and the unrest in neighboring Syria and thus economic growth fell to the 1-2% range in 2011-13.
The Najib Mikati government was formed and lasted for over three years under a tensely polarized political conditions pertaining now to the Syrian crisis, as the Lebanese were divided between two broad camps as pro regime and pro revolution.
On 15 February 2014, a new cabinet headed by Mr. Tamam Salam was formed to reduce the polarization, address the issue of Syrian refugees and contain the security, political, social and economic repercussion of their temporary presence. The number of registered Syrian refugees continued to increase to reach 1,183, 327 on 7 May 2015. As of that time, UNHCR Lebanon has temporarily suspended new registration as per Government of Lebanon's instructions
However, political polarization continued under Salam’s cabinet, which led to the paralysis of all political institutions. The parliament failed to elect a new President, which was scheduled to occur before the end of President Sleiman’s term on 25 May 2014. The Parliamentary elections was postponed in 2013 for 17 months first, and later for three more years to 2017 by the parliament. However, the Christian parties boycotted all legislative sessions of the parliament in protest of not being able to elect a President, doomed the parliament to complete paralysis. The council of Ministers is divided on an internal conflict over the interpretation of who assumes the prerogative of the President in the cabinet with the demand for consensus on all decisions and the signatures of all ministers on decrees. This has disrupted the Council of Ministers meetings and also disallowed it to reach any decision.
However, a positive development took place during the spring of 2016 as the government was able to successfully organize the scheduled municipal elections for over 1000 municipality all over Lebanon, including the security sensitive town of Arsal.
However, the more important positive development occurred on October 2016, as the Lebanese Parliament elected General Michel Aoun as the new President of the Republic. As a result of this agreement, a new cabinet was formed by Saad Hariri on 17 December 2016.
The government and the parliament resumed their functions in 2017 and they started to face the delayed responses to the amounting challenges. However, the spill-over of the conflict in Syria continues to threaten internal stability and security, despite a relative improvement in the security situation across Lebanon.
· The population increased by 37% since 2011 according to the Government of Lebanon, which estimates that Lebanon hosts 1.5 million Syrian refugees, including 1.05 million registered with UNHCR.
· 251 town and village, mainly in the peripheral areas of Lebanon are estimated to host 87% of all refugees and 67% of all deprived Lebanese. 79% of the refugees from Syria are women and children.
The UN and the Lebanese government developed “The Lebanon Crisis Response Plan”, whose objective is to support Lebanon through a combination of humanitarian assistance and resiliency aimed at reinforcing its economic, social, environmental stability.
Before 1998, Lebanon lacked the resources for a poverty profile. In 1998, the Ministry of Social Affairs and UNDP produced “The Mapping of Living Conditions in Lebanon”. The study was the first of its kind in Lebanon, and measured poverty and regional disparities at the Kada level in the1990s.
However, the report measured poverty through identifying and assessing unsatisfied basic needs rather than measuring income and expenditure monetarily. In 1998 and the years that followed, the Mapping of Living Conditions became a key reference for identifying the needs of poor populations in various regions, in addition to providing the statistical database for the poverty reduction programs initiated during that time. In 2006, due to the need to update the household data and evaluate the programs aimed at reducing poverty, a study by the name of “Comparative Mapping of Living Conditions between 1995 and 2004” used 2004/05 data generated by the “National Survey of Living Conditions and Household Budget Survey” to update the existing poverty profile. The study analyzed the changes in the deprivation levels in Lebanon ten years after the first mapping study. In August 2008, a national report entitled “Poverty, Growth and Income Distribution in Lebanon,” provided a detailed money-metric analysis of poverty in Lebanon, a combined effort between UNDP and the Ministry of Social Affairs. The report calculates a national poverty line based on household expenditures, along with estimating poverty gaps and Gini coefficients. According to this assessment, 28.5% of the Lebanese population (or 1.07 million individuals) were estimated to be poor, living on less than $4 per day. About 300,000 individuals were considered as extremely poor, living on less than $2.4 per day, and unable to meet their most basic food needs. Regional disparities were also striking: whereas poverty rates were insignificant in Beirut, they were very high in the North.
In December 2015, the Central Administration of Statistics has released figures for poverty in Lebanon pertaining to 2011, prior to the presence of Syrian refugees. According to this assessment, poverty in Lebanon was estimated at 27%, with the rate in Beirut and Mount Lebanon being the lowest and the highest rates recorded in the Bekaa and the North.
Given that no poverty assessment has been carried out in Lebanon since the onset of the Syrian crisis, UNDP is implementing a project under the title “Rapid Poverty Assessment in Lebanon”. This project is being conducted under the leadership of the Ministry of Social Affairs and in partnership with UNICEF and WFP, and the American University of Beirut (AUB). The project has three main objectives: (a) To assess the poverty level among Lebanese at the national and regional levels, in light of the Syrian crisis. (b) To extract a deprivation index which will also be used to report on the SDGs. (c) To estimate the poverty gap and Gini coefficient and recommend measures to alleviate poverty.
Lebanon is classified as an upper middle income economy and one of the wealthiest economies in the South Mediterranean region with a GDP per capita exceeding $11,000 in 2015. Up to 2010, the country witnessed four years of strong economic growth at an average annual rate of 9 percent, led by high investment rates and a strong service sectors. However, the political instability and deadlock preceding the election of President Aoun on October 31st 2016, combined with spill-overs from the Syrian conflict and lack of reforms - including a serious waste management crisis - contributed to the declining trends in confidence which is continuing to weigh on growth prospects – according to the latest IMF estimates, real GDP in Lebanon stood at 2 percent in 2014, 1 percent in 2015, and a projected 1 percent in 2016.
Lebanon continues to face serious challenges in translating relative financial wealth as a high Middle Income Country, into broad-based, socio-economic progress for its people, with significant regional disparities and pockets of extreme poverty remaining. According to the Human Development Report published by UNDP in 2015, Lebanon’s HDI value for 2014 is 0.769, ranking the country at number 67 out of 188, placing it among the high human development category. Between 2005 and 2014, Lebanon’s HDI value increased from 0.730 to 0.769, an increase of 5.3 percent or an average annual increase of about 0.58 percent. However, when the value of the encouraging HDI score is adjusted for inequality, it witnesses a loss of 20.8 percent, marking an inequality adjusted IHDI of 0.609 for 2014.
The Syrian crisis is also having a profound impact on social stability in an economy which was already facing many difficulties. According to UNDP’s internal estimates, the conflict is likely to have cost Lebanon $5BN in lost economic activity over the period of 2012-14, less than the $7.5BN loss previously estimated by the UN and WB as part of the Economic and Social Impact Assessment conducted in September 2013. Poverty in Lebanon was also affected by the conflict. The refugees are also thought to have affected the labor market; in fact, while the unemployment rate stood at 9% back in 2012, it is estimated by ILO that the influx of refugees has raised it to around 12% in 2014, in addition to raising the informality in the economy, which was thought to be relatively high in Lebanon well before the Syrian refugees’ influx.
Strongly related to weakening confidence, the external position of the Lebanese economy has also been affected in recent years. Indeed, the balance of payment surplus amounted to USD 1.23 billion in 2016, an optimistic sign given its weak performance during the past 5 years, contrasting with historical surpluses since the mid-1990s up till the onset of the Syria crisis. The fiscal deficit was positively affected by lower oil prices, but also negatively affected by slower growth and high interest payments. As such, fiscal deficit stood at $2.5BN for the period Jan-Aug 2016, rising from $1.9BN in the same period of the previous year.
Lebanon has one of the highest levels of debt in the world (as a percentage of GDP). In 2015 and 2016, total government debt resumed its upward trajectory from a stable level of 133% of GDP in 2013 and 2014 to 138% in 2015 and rose to 144% in 2016. This deterioration is due to weakening public finances, partly owing to a higher debt service burden, expansionary public spending, in addition to low real growth negatively reflecting on tax revenues. Looking ahead, in the absence of fiscal adjustment, debt dynamics will worsen further in an environment where global interest rates and oil prices are expected to slightly rise translating into higher transfers to the loss making electricity company and a further worsening of Lebanon’s interest payments.
The presence of Syrian refugees continued to exert a mixed impact on the fiscal position, indirectly weighing on universally provided subsidies (such as electricity, bread, wheat, gasoil, gasoline), and exerting a modest positive influence on some revenues (such as property taxes).
Despite the slight improvements in recent years, discrimination against women in many aspects of public life remains a significant impediment to social and economic development, with women’s share of paid employment is far below men’s and women’s political participation low. Lebanon has a GII value of 0.385, ranking it 78 out of 155 countries in the 2014 index. In Lebanon, 3.1 percent of parliamentary seats are held by women, and 53 percent of adult women have reached a secondary or higher level of education compared to 55.4 percent of their male counterparts. The GDI, a new measure of gender inequalities introduced in 2014, is based on the sex-disaggregated Human Development Index. The GDI measures achievement in three basic dimensions: Health, Education, and Command over economic resources. The GDI for Lebanon was calculated at 0.899 in 2014.
Finally, while Lebanon’s multi-lingual, confessional and demographic diversity represents a national resource, it also presents considerable challenges to national and political unity in a time of regional turmoil. The difficulties in forming a new government and agreeing on a new electoral law demonstrate the extent of polarization politically.
Lebanon has witnessed notable success in making progress towards several Millennium Development Goals (MDGs) since 2000. Lebanon has achieved at least seven targets of the MDGs, mainly in health, primary education and gender equality in education. Youth Literacy is almost at 100%, and gender parity is achieved at all educational school levels. Lebanon has made significant progress in reducing maternal mortality rates and has reached the “MDG 5” targets, increasing the rate of births attended by health professionals and expanding the use of birth control methods all reflect important achievements in the area of health and gender.
UNDP helps the Lebanese government to deliver its mandate, with support services strengthening the judiciary, Parliament, and the Prime Minister’s office. We assist in the development of policy and focus closely on ways to improve public and civic administration. Working with the Parliamentary Committee on Human Rights, UNDP is a lead partner in the development of the Human Rights National Action Plan. This will enshrine rights for minorities – especially women, children, and people with disabilities and refugees – as well as the right to access public services and institutions for all.