Beirut faces a massive challenge on aid and reform

Significance

The government has drawn up a detailed document setting out the gravity of the country’s economic plight and requesting over 10 billion dollars of additional aid from the IMF and other donors to support reforms aiming to put the economy on a sound footing by 2024. Many of the reforms are familiar, but others are new and radical, including devaluation and drastic measures to reduce public debt and restructure the financial system.

Impacts

• Elites will broadly support the plan, seeing few alternatives.
• Currency devaluation will contribute to inflation and could push many more people into poverty.
• The IMF programme will include social safety nets, though these may exclude some of the most vulnerable, including refugees.
• Measures will struggle to address the deep-rooted corruption that is intrinsic to Lebanon’s sectarian patronage system.