Regional Director Meets President Aoun to urge quick and strong measures to restore confidence in the economy
BEIRUT, Lebanon (November 6, 2019): 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 a high-risk situation of economic, financial, and social uncertainty.
“We found His Excellency, the President, very attentive to our concerns about deteriorating social and economic conditions of the Lebanese people,” World Bank Regional Director Saroj Kumar Jha said after the meeting.
Jha emphasized that Lebanon does not have the luxury of waiting to address critical economic and social issues. “I met with the president to urge swift and timebound measures to ensure Lebanon’s economic and financial stability,” Jha said. “Politics captures the most attention, but the economy has the most risks. With every passing day, the situation is becoming more acute and this makes 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 the balance sheets of banks and Lebanon’s central bank.
By 2018 estimates, about a third of the Lebanese people live in poverty, 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 and could further rise sharply
International experience suggests that in economic crises, both the poor and middle class can be hurt disproportionately, and 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 is a politically-neutral organization, with no agenda or mandate,” Jha said. “But we have a duty to alert our partners when we see them facing difficult situations. We must arrest further degradation of the 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 to focus on stability and growth factors by time bound action to address the growing external imbalances, improve growth prospects through investments and job creation, redress social inequities, fight corruption, and ensure transparent and accountable government,” Jha said.
The World Bank has been a longstanding partner of Lebanese people, and working closely with members of the international community stands ready to extend all possible support to the new government that commits itself to good governance and creating opportunities for all Lebanese people, especially youth and women.