International Community Rallying around the Four-Track Approach to Support Lebanon

October 12, 2013

WASHINGTON, October 12, 2013 – International institutions, global partners and donors agreed today to support Lebanon as it grapples with the impact of the Syrian conflict on its economy and social sectors.  According to a recently completed World Bank-led assessment, Lebanon faces billions of dollars in lost economic activity as a result of the crisis in Syria, and the massive influx of refugees is overwhelming public services and driving up unemployment and poverty rates.  

All participants in today’s meeting agreed that Lebanon cannot and should not shoulder alone the costs associated with the Syrian crisis,” said Inger Andersen, World Bank Vice President for the Middle East and North Africa region. “It is now time for the global community to step up with the support Lebanon needs to avoid further deterioration in quality and access to public services and erosion of development outcomes down the road.”

The Economic and Social Impact Assessment serves as a guide for the Lebanese Government and partners to develop a prioritized short, medium, and long term “Roadmap” of recommendations to mitigate the impact of the Syrian conflict. The four-track approach focuses on alleviating the impact on the government’s budget as well as addressing longer-term needs of vulnerable communities.

“Lebanon really needs international support,” said Mohammad Safadi, Lebanon’s Minister of Finance. “We cannot increase our borrowing to face an overwhelming crisis that is not of our own doing.”

The first track is centered on funding existing projects that can be scaled up and/or implemented speedily and for which donor grant resources can be made available. These projects will have an immediate impact on Lebanese families and communities affected by the Syrian crisis. The second track focuses on mid-size projects that need longer preparation and implementation time.  This could potentially be done through a Multi-Donor Trust Fund. The third track includes projects with sustained development impact that have the potential to carry sectoral policy reforms such as infrastructure and private sector investments.  These could be financed through World Bank Group and/or other international financial resources and possibly blended with grant financing from donors. The fourth track has to do with enhancing private sector engagement in the Lebanese market though targeted financing, including partial risk guarantee schemes, aimed at the delivery of services such as energy, electricity, water and transport.

Close to one million refugees have crossed the border into Lebanon to date, a figure that is expected to climb to 1.3 million by the end of 2013. The upward pressure on government expenditures coupled with the decrease in revenue collection is widening Lebanon’s already large fiscal deficit by a cumulative US$2.6 billion over the course of the period assessed.  Beyond the economy, the rapid growth of the population has a number of potentially negative social consequences. Decreased quality and access to social services as a result of rising demand could push an additional 170,000 Lebanese 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.

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