Lebanon used only 30 percent of World Bank loans

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World Bank regional representative Farid Belhage (R), International Finance Corporation regional director Tom Jacobs (second from right) and IMF regional director Mohammed al-Hajj (L) at an event in Beirut. (Photo: Al-Akhbar)

By: Mouhamad Wehbe

Published Thursday, November 6, 2014

The World Bank wants to discuss the impact of sectarianism on the Lebanese economy. Are sects the main impediment to growth or are they mere tools to cover other obstacles? This question was put forward on Wednesday by the World Bank regional representative Farid Belhage at a lunch banquet organized by the Lebanese Businessmen Association.

Belhage did not provide any answers, but he presented the idea as the latest diagnostic tool to be used by the World Bank to identify obstacles to growth in Lebanon. Despite the dire need for reform to confront repercussions from the Syrian crisis, the country seems impervious to such attempts.

The meeting's context was different than usual conferences and seminars attended by businessmen and capitalists. This time, they did not act as speakers and discussants as before. They only had to listen to the trio representing international institutions, International Monetary Fund (IMF) regional director Mohammed al-Hajj and International Finance Corporation regional director Tom Jacobs, in addition to Belhage.

However, the three representatives from international institutions added more questions to former statements on the current situation in Lebanon and impact of the Syrian crisis and regional turmoil. Belhage, for example, concluded his talk by mentioning that the World Bank created a new tool to identify impediments to growth. "There is a dialogue on the sectarian question and regional conflicts. Is sectarianism the primary obstacle to growth and reform? Or are there other obstacles concealed by the sectarian dimension?" he asked.

During his speech, Belhage criticized the government for failing to spend its World Bank loans. "The Bank’s obligations' portfolio with Lebanon is $1.1 billion. But only 30 percent were utilized and $700 million remain at the disposal of the economy and the government. Yet, there was no response due to political, administrative, and institutional obstacles," he explained. "This is unacceptable in the current situation related to the difficulty of external financing."

However, what Belhage mentioned about the international trust fund set up to help Lebanon cover the cost of hosting refugees was even more embarrassing for the government, especially since some of those responsible for the dossier were present. Belhage declared that $30 million are already in the fund and a further $31 million are on their way.

This prompted the Central Bank's deputy governor to pose the following question. "We heard similar statements in Washington recently, when we met with World Bank and IMF officials. And when we asked them if they could help, they said the Lebanese people are very brave. But this does not provide bread for the poor or shelter for the displaced."

"Since 2011, the budget deficit multiplied by one and a half times and this reflects in the cost of this crisis on Lebanon. Without a written text, how would international institutions provide assistance to Lebanon?" he asked.

Belghage's reply, however, was not far from the written text. Using the customary diplomacy of World Bank officials, he gave general answers without saying anything conclusive or final, leaving for the bearer of the question to chose what he wants to understand. Otherwise, the rest of Belhage's speech was a tedious regurgitation of World Bank statements concerning Lebanon in the past three years.

He explained that regional crises usually have a great negative impact on Lebanon.

Nevertheless, "Lebanon's administration and government have a central responsibility to remedy these difficulties and move ahead with reforms, which will stimulate growth and create job opportunities," he announced.

Belhage also mentioned that 1.1 million Syrian refugees have been registered at the UNHCR, "But there are negative repercussions on Lebanon and they continue to impact its economy. We presented a report to the Lebanese government about the direct cost, the spread of poverty and unemployment, the government's reduced ability to function, and declining access to public services."

Mohammed al-Hajj, on the other hand, criticized the government's monetary policies, which have recently expanded. "But there are limits at which we should stop," he said. "Monetary policies should support economic policies."

"The short term priority is to orient monetary policies to create jobs and to have a budget and related decisions... The current level of growth does not supply enough power to the economy to absorb unemployment and newcomers."

As for challenges faced by Lebanon, "Nobody can discuss things that no one knows about," Jacobs concluded.

This article is an edited translation from the Arabic Edition.

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