Lebanon Straining under Multiple Shocks from Syrian Crisis

September 24, 2013

World Bank working with Lebanon on strategy for managing the social and economic impacts of the neighboring conflict

NEW YORK, September 24, 2013 – Dr. Jim Yong Kim, President of the World Bank Group, met today with Michel Sleiman, the President of Lebanon, to begin work on a plan for coping with the spillovers from the fighting in Syria. Lebanon faces billions of dollars in lost economic activity as a result of the conflict, while the massive influx of refugees is overwhelming public services and risks driving up unemployment and poverty rates. A World Bank led assessment has calculated both the cumulative social and economic costs of the ongoing crisis and the resources Lebanon will need to withstand them.

“We now have a clear picture of the costs Lebanon faces for sheltering nearly a million refugees fleeing the fighting in Syria,” said World Bank Group President, Jim Yong Kim. “I have thanked President Michel Sleiman for Lebanon’s generosity and discussed with him how the World Bank and the international community can step up and do their part, so that Lebanon does not shoulder the costs alone.”

The Economic and Social Impact Assessment (ESIA) was conducted at the request of the government of Lebanon to identify and quantify the effects of the conflict in Syria. Completed in just four weeks in collaboration with the government of Lebanon, the United Nations, the European Union, and the International Monetary Fund, the assessment provides a snapshot of the period 2012 to 2014 offering a comprehensive estimate of the overall impact of the crisis along with detailed analysis of the consequences for certain key sectors. As a complement to the humanitarian efforts underway, the ESIA will serve as a guide for government policy decisions and the basis for coordinating global support.

Close to one million refugees have crossed the border into Lebanon to date, a figure that is expected to reach 1.3 million by the end of 2013. The increase in government expenditures coupled with the decrease in revenue collection is widening Lebanon's already large fiscal deficit and will reach an estimated US$2.6 billion over the course of the period assessed in the ESIA. The demand on public services has surged along with the population, and if current trends persist, rising demand will drive up government expenditures by an estimated US$1.1 billion over the 2012 to 2014 period. Government revenues are expected to drop by US$1.5 billion due to interrupted trade and an erosion of business and consumer confidence.

The rapid growth of the population has a number of potentially negative social consequences. More than 170,000 Lebanese will be pushed into poverty by 2014. Increased competition for jobs could double the unemployment rate to above 20 percent over the same period. Levels of morbidity may increase as access to healthcare is compromised by a system overwhelmed with responding to the urgent needs of the refugee population. The ESIA estimates that up to US$1.6 billion will be needed to maintain the quality of social safety nets and health and education systems, and to restore access to pre-crisis levels. In addition, services including electricity, solid waste management, transportation and the water supply will need additional investments to meet the needs of the Lebanese population and the refugees.

"If the conflict continues, there could be as many as 1.6 million refugees in Lebanon by the end of 2014," said Inger Andersen, World Bank Vice President for the Middle East and North Africa region. "Lebanon will require ongoing and extensive assistance as they cannot -and should not be expected to- shoulder the costs alone of ensuring that institutions and infrastructure are capable of meeting the demands of the broader population while responding to the unfolding human tragedy."

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