Lebanon’s economy: still stuck

Lebanese President Saad al-Hariri and U.S. Secretary of State Mike Pompeo in March 2019
March 22, 2019: After the photo opportunity, Lebanese Prime Minister Saad al-Hariri did not enjoy a harsh lecture from U.S. Secretary of State Mike Pompeo (source: dpa)
  • A year ago, Lebanon was offered $11 billion in infrastructure loans if it began reforms
  • Progress since has been all but stymied by corruption and Hezbollah’s influence
  • If nothing changes, the country appears headed for default and mass emigration

Almost exactly a year ago, French President Emmanuel Macron hosted ministers and investors from 50 countries at an international conference in Paris to support development and reform in Lebanon. Donors at the CEDRE meeting (a French acronym for “Economic Conference for Development through Reforms with the Private Sector”) agreed to extend $11.1 billion in loans and grants to fund a six-year Capital Investment Program (CIP) submitted by the Lebanese government. Financial support for this program, which won a positive assessment from the World Bank, was made contingent on tangible improvements in electricity supply, waste and water management, and public transport.

At the time, Lebanon watchers were skeptical, with some wondering how anyone could expect the funds not to be embezzled in a country that had been vainly promising to turn the power back on for 30 years. Perhaps for this reason, the program was based on three interlocking efforts: 1) a cleanup of public finances; 2) improvements in basic public services; and 3) renewed efforts to fight corruption.

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