Poverty in Lebanon has nearly tripled over the past decade, with an estimated 44% of the population living under the poverty line. In some parts of Lebanon, up to 70% of residents and 9 in 10 Syrian refugees are living in poverty. This sharp increase in poverty is due to years of political instability, economic mismanagement, corruption, civil war and other armed conflicts. These challenges have affected the health care system and food production.
Most Lebanese hospitals operate at less than 50% capacity due to limited resources. Similarly, 55% of families do not have health insurance and 52% cannot obtain essential medications. Additionally, 1.65 million people in Lebanon face severe food insecurity, which was exacerbated by the 33% decrease in agricultural output in 2020 and Lebanon’s conflict with Israel. With the election of a new president after a two-year impasse, the country’s current challenge is to secure funding for reconstruction, development and to reduce poverty in Lebanon.
IMF and Reforms
In early 2025, the International Monetary Fund (IMF) expressed willingness to provide financial support to Lebanon after the new government requested IMF loans. However, any potential loan program will not be offered until reforms occur. In 2022, the IMF created a loan package worth $3 billion for Lebanon contingent on economic reforms. However, Lebanon never received the funding because the government could not successfully implement the reforms. The challenge for Lebanon now is to successfully administer the required reforms so that the IMF will not refuse the much-needed funding again.
Lebanon has to implement a series of critical reforms to secure an IMF loan program by the end of spring. These include restructuring the financial sector, ensuring fiscal and debt sustainability, improving governance and transparency, reforming state-owned enterprises and enhancing the quality and availability of economic data.
Improving governance and transparency and reforming state-owned enterprises are among the most important reforms that Lebanon can make. The Lebanese state has increasingly ceded control to private actors, leading to a political economy shaped by privatization and minimal state intervention — trends that have significantly impacted the cement and public procurement sectors. These sectors lack oversight, regulation enforcement and national policy agendas, leading to corruption and opaque management of reconstruction funds. This creates delays, cement shortages, substandard work, low competition and exorbitant material prices.
Lessons for Lebanon
Saudi Arabia took on the challenge of improving regulations in its financial sector in 2023. The country strengthened the “legal and regulatory frameworks” for banks. It utilized the IMF’s resources to enhance its stress testing capabilities for banks. Saudi Arabia’s financial sector reforms can promote economic stability by decreasing the risk of banking financial crises — events that can severely increase poverty and income inequality.
Similarly, in 2022, Morocco undertook the challenge of reforming state-owned enterprises, improving the investment climate and fostering a more competitive business environment. The country established a new investment fund and introduced a modernized investment framework. Morocco can improve accountability, fiscal health, transparency and governance with these reforms. Furthermore, Morocco is working towards poverty reduction by prompting private sector growth, job-rich development and improving conditions for consumers and businesses.
Final Remarks
As Lebanon continues to struggle with a lack of accountability, transparency and limited competition, urgent action has to be taken by the newly formed government to implement reforms, for IMF loans are to be secured.
While Lebanon’s challenges are monumental, success stories such as Saudi Arabia’s financial sector reforms and Morocco’s efforts to strengthen competition offer valuable lessons.
These examples show that economic stability, growth and poverty reduction are within reach with the right reforms. Lebanon can secure the IMF loan needed to initiate reconstruction and reduce poverty by prioritizing these reforms and genuinely committing to the people.
– Haley Parilla
Haley is based in Cape Coral, FL, USA and focuses on Business and Politics for The Borgen Project.
Photo: Pixabay

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