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June 08, 2021
After the End of Subsidies in Lebanon: The Need for an Inclusive and Comprehensive Social Protection Strategy

 
Lebanon is facing one of the worst economic and financial crises in its modern history, described by the World Bank’s most recent Lebanon Economic Monitor as possibly one of the top three most severe global crises since the mid-nineteenth century. Currency devaluation, inflation, and deteriorating social services have significantly increased socio-economic hardship. More than 50% of the population is now estimated to live in poverty amid high levels of vulnerable employment or unemployment.
 
Protecting and assisting those living through these crises requires modern, effective, and innovative strategies for social protection. Yet, the current system of social protection lacks cohesion, is ultimately unsustainable, and requires urgent overhaul. Until today, one of the central pillars of Lebanon’s social protection strategy is the Central Bank’s scheme of subsidizing essential consumer goods for wheat and food products, medicine, and fuel, which will have to be phased out over the coming months amid dwindling foreign exchange reserves. Formal institutions such as the National Social Security Fund (NSSF) cover only a fraction of the population, or are exploited as a tool for clientelism, such as in the case of the National Poverty Targeting Program (NPTP). Other schemes involve one-time cash-transfer programs in Lebanese pounds (LBP), which provide only temporary relief rather than a sustainable solution. Such programs moreover have uncertain macroeconomic effects on inflation that could eventually do more harm than good to the rest of the population.
 
In cooperation with UNICEF, the Lebanese Center for Policy Studies (LCPS) hosted a panel of experts last year to discuss alternatives to the existing subsidy schemes issued by the Lebanese Central Bank, the methods by which these alternatives could be implemented, and the implications such measures would have. In doing so, the panel drew attention to five key areas: 1) existing subsidy structures and main beneficiaries, 2) approaches to lifting subsidies, and lessons from other countries, 3) impact of lifting subsidies at the social level, 4) social assistance gaps and vision, and 5) inclusive social protection approaches to disabled populations. The roundtable was conducted following Chatham House Rules.
 
To build on the discussions shared in this panel and account for the rapidly deteriorating context, LCPS Senior Researcher Fadi Nicholas Nassar followed up with each individual panelist for an in-depth interview on the respective theme they presented during the roundtable.
 
Contributors
Walid Sayegh, Economic and Social Policy Specialist with UNICEF, Lebanon Country Office

Lara Feghaly, Public Policy Consultant at Beyond Group

Lea Bou Khater and Rania Eghnatios, Technical Social Protection Officers at the International Labor Organization (ILO) Regional Office for Arab States

Sylvana Lakkis, Acting President of the Lebanese Union for People with Physical Disabilities and Chairperson of the Regional Arab Bureau of Disabled People’s International (DPI)





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