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Political stability key to securing donor funds for Lebanon

  • Andersen says the World Bank is working simultaneously on four tracks.

BEIRUT: Political stability and the formation of a government would encourage the international community to commit funds to Lebanon in a bid to ease the fiscal burden caused by the influx of Syrian refugees to the country, a senior World Bank official said Friday. Inger Andersen, World Bank vice president for the MENA region, said that momentum had been created to secure financial aid to Lebanon but it should be sustained and built on in order to speed up the process.

“Initially the numbers will be modest ... no government will pledge billions from one day to the next,” Andersen added, highlighting that donor governments would have to seek parliamentary approval before appropriating aid resources.

Andersen was speaking at a round-table meeting at the World Bank’s Beirut offices at the end of a two-day visit to Lebanon during which she met the country’s top officials ahead of talks in the U.S. next week between a Lebanese official delegation and members of the IMF and the World Bank.

“Clearly when countries do have a government that is sitting, it encourages donors to come in ... it is not a Lebanese specificity ... We very much hope that a resolution to this can indeed be found,” Andersen said.

Andersen was responding to a question by The Daily Star on whether political instability under a caretaker government was discouraging donor states from committing funds to Lebanon.

“This is a conversation that we heard from government ministers and that we have reflected back to them. Everyone understands that this is an important issue,” she added.

In a recent assessment of the impact of the Syrian crisis on Lebanon, the World Bank estimated that some $1.4 billion to $1.6 billion would be needed for stabilization and forecast the cost of the health, education and social safety net to range between $308 million and $340 million.

Andersen said the World Bank was working simultaneously on four tracks to secure and channel resources to ease the burden on the treasury’s budget.

The first track entails allotting resources to the government through quick-dispersing platforms already established by the World Bank in Lebanon, mainly in the health and education sector.

Andersen cited the World Bank’s Second Education Development Project in Lebanon as one of the platforms that can help the Education Ministry cope with the increasing number of students.

According to United Nations High Commissioner for Refugees and other U.N. agencies, the number of refugees from the Syrian conflict in Lebanon stood at 914,000, or nearly 21 percent of the country’s population as of August of this year.

The World Bank report said the Syrian crisis had depressed government revenue collection by some $1.5 billion while increasing state expenditures by $1.1 billion due to the surge in demand for public services, with a total fiscal impact of $2.6 billion.

The report, which was prepared at the request of the Lebanese government and presented on the sidelines of a Sept. 25 meeting of the U.N. General Assembly, was aimed according to Lebanese officials at paving the way for the establishment of a Multi Donor Trust Fund to address Lebanon’s needs.

“At this meeting ... the numbers got a sort of overall diplomatic blessing and a good wind in the sails as far as putting the needs and the impact of this crisis on Lebanon on the global agenda,” Andersen said.

She added that the second track involved the establishment of a Multi Donor Trust Fund to channel money to the Lebanese government while the third track would be to provide funds to the Lebanese government on a loan basis were it to pursue such an avenue.

However, sources close to the discussions have ruled out any government request for a loan due to the politically divisive issue of incurring the cost of hosting refugees given Lebanon’s high debt-to-GDP ratio.

The last track would involve enhancing private sector investments in cooperation with the International Finance Cooperation, a member of the World Bank which has been successfully cooperating in recent years with the private sector in Lebanon, Andersen said.

“These [tracks] need to be driven at the same time and in parallel but some will deliver faster and some will deliver slowly and more slowly simply because of the manner [in which] these things work,” Andersen said.

The World Bank report said the number of Syrian-conflict refugees could swell to 1.3 million by the end of 2013 if the war continued.

 
A version of this article appeared in the print edition of The Daily Star on October 05, 2013, on page 1.
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