Month: July 2023

“The agreement aims to address the gas supply crisis for power plants, while tackling payment issues and complications arising from US sanctions,” said the statement from the prime minister’s office.

Iraq is reliant on Iranian gas for a third of its energy needs, but is unable to directly pay for it as a result of US sanctions on Iran, forcing the country to resort to a complicated mechanism for transferring funds.

According to the mechanism, payments were to be held in a bank account and – following approval from Washington – be used by Tehran to fund imports of food and medicines, a method which left Iraq in heavy arrears.

Earlier this month, Iran halved its supply of gas to Iraq because of unpaid bills of more than $12 billion, according to Sudani.

Speaking in a televised address on Tuesday, he stated that “as the American side did not give the necessary permission for the transfer of funds… the supply of Iranian gas was stopped.”

“Because of the transfer mechanism and its complexity, we were unable to obtain authorisation to transfer these outstanding payments so our Iranian neighbour could continue to supply us” with gas, he continued.

He added, however, that a recent payment to Iran of around $1.9 billion had been made and that as a result of Tuesday’s agreement “we will be able to guarantee that the gas will continue to flow.”

In recent years, Iraq has seen widespread unrest and demonstrations, triggered in large part by failing energy supplies during intensely hot summers.

Corruption, crumbling infrastructure and continuing instability after decades of conflict and sanctions have left the country’s energy sector in a dire state, despite having some of the world’s largest oil reserves.

Baghdad has recently also been exploring several possibilities for reducing reliance on Iranian gas, such as imports Qatar and recovering flared gas from oilfields.

There has also been criticism of Washington for its refusal to allow the release of funds to Iran.

On Sunday, The Coordination Framework – a coalition of Iran-linked Shia parties that form the largest bloc in parliament – called on the government in a “to contact the US side and urge the immediate unlocking of the unpaid bills related to Iranian gas imports”.

Source:https://ifpnews.com/iraq-iranian-gas-crude-oil/

While Iraq was teetering on the edge of a full-fledged internal conflict last summer, today, the country seems to enjoy a level of stability not seen in the past two decades.

This is due to a shared desire across the political spectrum, particularly within the Shia community, to stabilise the country. After last year’s intense power struggle among Shia factions, efforts were made to minimise conflicts between armed groups, suppress critical voices, and reduce public dissent. As a result, the government of Mohammed Shia al-Sudani is enjoying relative peace and calm which has given it a chance to push through its agenda.

On June 12, it passed a generous budget through the parliament – the biggest in Iraq’s history – which is supposed to fund its plan to expand essential services, such as electricity and water provision and build new infrastructure and housing in major cities. But these initiatives are by far not enough to address the severe political, socioeconomic and climate challenges the country is facing.

Those necessitate major reforms in the political and economic sectors, which the government does not have the mandate to undertake. Sooner or later, the suppressed political crisis will resurface.

Big budget, little legitimacy
Last year, the Western sanctions imposed on Russia over its invasion of Ukraine, combined with oil supply shortages, caused a surge in oil prices, with the average price per barrel reaching $100.

This resulted in handsome profits for energy exporters, including Iraq, which saw its oil revenues jump from $75.5bn in 2021 to $115bn in 2022.

This extra income flow allowed the Iraqi government to put together the largest budget in the country’s history, allocating $153bn for the year 2023, which the parliament approved on June 12. This is a 72 percent increase compared with the 2021 budget – the last one to be passed by the Iraqi legislature.

The biggest chunk of this money – about $58bn – will go to paying the wages of public employees and pensions. The government has said that it plans to hire more than half a million Iraqis into the already over-inflated public sector to help resolve the problem with unemployment.

A large sum – about $23bn – has also been allocated to the security sector, which has traditionally been well-funded. Some $2.8bn of it is dedicated specifically to the Popular Mobilisation Units (PMUs) militia.

By comparison, five ministries concerned with providing public services, including health and environment, social affairs, education, higher education and water resources were given $24bn in total. This amount is by far not enough to address urgent problems such as pervasive power cuts across the country, declining access to clean water, pollution and land degradation, crumbling education infrastructure, severe shortages of medical staff, inadequate health service provision, etc.

The public works and infrastructure projects al-Sudani’s government has announced are unlikely to make much of a difference.

By focusing financial resources on public employment and security structures, his cabinet is perpetuating the status quo, keeping various vested interests satisfied. It is ensuring short-term stability by consolidating the patronage networks that dominate Iraqi society, granting various political parties and figures the opportunity to employ their loyal supporters. Armed groups are also pacified not only by being granted direct funding but also by being given room to infiltrate various institutions and benefit from public works projects through kickbacks.

This is hardly surprising given that al-Sudani’s government does not really have the mandate to push through reforms. The prime minister operates as a consensus leader, supported by the Coordination Framework, a coalition of mostly Shia parties, some with pro-Iran leaning.

The interests they represent were challenged by the major protests in 2019-2020, which rejected the entrenched political elites and foreign interference in the affairs of the country. Some of these parties, like the Fatah Alliance, are linked to armed groups, which were accused of using brutal violence to suppress the demonstrations.

For that, they were punished at the national polls in 2021. Specifically, the Fatah Alliance saw a significant decrease in their parliamentary seats, dropping from 48 in 2018 to a mere 17.

Despite losing the elections, they managed to gain power by thwarting the formation of a national majority government by the Sadr Movement, the Kurdistan Democratic Party, and the Sunni “Sovereignty Alliance”, which performed well in the elections.

Backed by forces that lack legitimacy in the eyes of the majority of Iraqis, the government is making no significant effort to address the grievances of the Iraqi people. It is simply presiding over the redistribution of the windfall oil profits among the elites who are maintaining peace in exchange.

Short-term stability, long-term disaster
While stability is important, the current Iraqi system – dominated by patronage networks and armed groups – cannot sustain it for long, as it is inherently dysfunctional. Such systems tend to operate smoothly only so long as there is sufficient revenue that satisfies the interests of the elites and sustains basic state functions. However, when financial resources dwindle, the elites no longer perceive short-term stability as beneficial to their interests.

It is crucial to note that Iraq’s financial stability is heavily dependent on the price of oil, which is an unstable factor. The country also has a significant budget deficit, estimated at $49bn in the 2023 budget. In the event of a decline in the price of oil, the country would face significant financial difficulties which could quickly translate into political instability.

Furthermore, the current state of affairs – while appearing positive to some observers – is exacerbating Iraq’s major problems. Pouring money into armed groups only strengthens them and further weakens the state. It makes it that much more difficult – if not impossible – for the government to get back monopoly over the use of force in the country.

Throwing money at the state security sector without reforming it also contributes to fragmentation and susceptibility to politicisation, which enables its exploitation by domestic and foreign actors.

Expanding public sector employment does little to resolve the problems that cause joblessness, including a weak private sector and economic inefficiency.

The absence of reform in the public sector combined with big public spending also feed into patronage networks and strengthen parties and individuals that have little popular legitimacy.

All of this is incredibly damaging to Iraq and its future. It comes at a time when the country faces frightening levels of climate-change-related devastation: rising temperatures, soil erosion, intensified droughts, water scarcity, and relentless sand and dust storms. Iraq is ranked the fifth-most vulnerable country to climate change worldwide and it faces temperatures that increase seven times faster than the global average.

Severe climate change impacts are combined with other pressing challenges that trouble the lives of Iraqis, including limited access to safe and clean drinking water, pervasive pollution, energy insecurity, declining health care and education services, etc.

To tackle these problems, the Iraqi government needs to overhaul the public sector, fight corruption, restructure and reform state structures to increase transparency and efficiency and most importantly, redirect funds towards the key sectors: environment, health care, education and water works. Regrettably, its backers have no interest in engaging in the systemic change that is urgently needed in Iraq.

The windfall profits derived from oil are a missed opportunity to diversify Iraq’s revenue streams and build climate resilience within the country. Iraq urgently needs its population and infrastructure to be prepared for the escalating impacts of climate change.

The Iraqi political elite may be enjoying the oil revenues and the peace and quiet of its status quo but those will not last long. The protests of 2019 were the harbinger of what is to come. It is not a question of if Iraq will face severe turmoil, but when.

Source:https://www.aljazeera.com/opinions/2023/7/8/windfall-oil-revenue-is-buying-illusory-stability-in-iraq

The Lebanese banking sector has witnessed its first merger since the financial crisis hit the country in 2019, as banks continue to experience difficult and uncertain operating conditions.

Bank Audi is merging the local business operations of its fully-owned subsidiaries Audi Private Bank and Audi Investment Bank into its own business.

All the assets, liabilities rights, and commitments of Audi Private Bank and Audi Investment Bank will be transferred to Bank Audi. The total assets of Audi Private Bank stood at $1.43 billion while the assets of Audi Investment Bank totalled $307.5 million.

The merger, which will ensure the business continuity to Audi Private Bank and Audi Investment Bank customers, will create synergies on the operational front, a statement said.

“This strategic merger enhances the future competitive positioning of Bank Audi with a significant elimination in duplication and lower operating expenses. Specific synergies were created in this respect, which integrate, among others, the governance and control frameworks of Audi Private Bank and Audi Investment Bank into those of Bank Audi,” the bank said.

The merger has received the approval of Lebanon’s central bank.

A source in Bank Audi, asking not to be identified, told Arabian Business: “The merger of Audi Private Bank and Audi Investment Bank came in line with the new policy of reforming the bank with restructuring efforts to bolster its financial standing, governance and ability to withstand pressures.”

He added: “A smaller and cleaner banking sector would improve cost efficiency and effectiveness and could benefit as well from rising focus on digitalisation. Furthermore, the banking sector’s overall health has a strong impact on sovereign risks and subsequently any potential sovereign rating for Lebanon. A credible banking sector is likewise key to Lebanon’s re-access to international capital markets.”

Lebanon’s central bank urged the banks to raise capital by 20 percent by February. Therefore, banks might be forced to merge with others, which would ensure the reduction of the number of banks in the sector.

“Obviously, some of the banks might find it difficult in the current environment to adapt and meet requirements, and will have to exit the market. Other banks will be able to survive and continue operating, even if it means having to sell part of their affiliates abroad in order to generate sufficient liquidity and boost their capital,” the banker said.

A total of 18 Lebanese banks are present abroad in 32 countries through a foreign network of 329 branches managing total assets of $37 billion.

Bank Audi, whose total assets stood $35.2 billion, is in the process of selling its foreign units. It said last week that it has signed the final agreements to sell its operations in Jordan and Iraq to Jordan-based Capital Bank Group.

First Abu Dhabi Bank is also seeking to acquire the Egyptian business of Bank Audi.

SOurce:https://www.arabianbusiness.com/industries/banking-finance/457183-first-lebanese-banking-merger-since-2019-agreed-as-capital-pressures-rise

As Lebanon battles ongoing economic devastation, billionaire businessman Bahaa Hariri has openly backed a civic plan for the country’s path to recovery.

Hariri, son of assassinated Lebanese Prime Minister Rafik Hariri, told Arabian Business he is backing Sawa Li Lubnan (Sawa) – a group that is mobilising citizens to campaign for meaningful reform in Lebanon to crush corruption and deliver economic prosperity.

Hariri, who has thus far steered away from politics – unlike his brother Saad who was the country’s PM until the 2019-2020 protests – quashes reports that he is angling to become the country’s next prime minister.

“Political office is not for me,” the 55-year-old construction magnate said, adding that Sawa is “working independently” for change.

Sawa’s grassroots movement aims to create a non-sectarian system, end corruption, restore economic growth, empower a new generation of leaders, strengthen the legal system and restore sovereignty.

The group has 20 full-time staff and an advisory board of 20 peers, as well as a network of 200 volunteers across eight Lebanese regions. Sawa represents all regions and religious affiliations and brings together industry experts from diverse backgrounds.

According to Sawa’s agenda materials, Lebanon is in “economic freefall” and “if we dodge the fundamental issues that have led us to this disaster, Lebanon and our children’s futures will be destroyed”.

Reversing economic collapse
“The economy has completely collapsed… this is the worst crisis Lebanon has faced in 160 years,” Hariri said. “Something has to be done to try and make a change.”

According to the latest World Bank Lebanon Economic Monitor (LEM), the economic and financial crisis is likely to rank in the top ten, possibly top three, most severe crises episodes globally since the mid-nineteenth century.

“In the face of colossal challenges, continuous policy inaction and the absence of a fully functioning executive authority threaten already dire socio-economic conditions and a fragile social peace with no clear turning point in the horizon,” the report notes.

Lebanon’s GDP plummeted from close to $55 billion in 2018 to an estimated $33bn in 2020, while GDP per capita fell by around 40 percent in dollar terms, said the World Bank. The effect on prices have resulted in surging inflation, averaging 84.3 percent in 2020.

“Sawa is not a political party… there are enough of those,” said Hariri. “We are a social movement that is unequivocally calling out the political problems and demanding solutions.”

The businessman said Sawa would be carrying out its advocacy on television, social media and in real life communities.

Crushing corruption
Hariri said stamping out corruption is his first priority.

“We need to reach by consensus across the board to crush corruption… it’s endemic and it’s killing the private and public sector. To gain a thriving economy we need to address many points such as debt restructuring and a single convertible exchange rate.”

The international businessman recommended revisiting the implementation of the Tiaf Accord – an agreement that provided the basis for ending Lebanon’s civil war in 1989. “It’s part of the Lebanese constitution and we need to separate religion from politics. We need change now.”

Hariri, who has been based in London for 37 years, said that Lebanon’s significant international diaspora “would not accept any international band aid”.

“They need to seriously change to take Lebanon seriously… they are not willing to invest anymore,” he said.

“A lot of work has to be done across our board which is cross-sectarian. There is no other way. Lebanon is like a mosaic.”

An accomplished businessman, Hariri founded Horizon Group Holdings in 2002, a property investment and development company, with operations in Lebanon, Jordan and Saudi Arabia.

Hariri sold his stake in family-owned construction company Saudi Oger to Saad in 2008.

Source:https://www.arabianbusiness.com/politics-economics/465602-can-lebanons-economic-ruin-be-reversed-bahaa-hariri-is-counting-on-it

Amidst an increasingly turbulent year, a ray of hope has shone on Lebanon in the form of an influx of expats and tourists benefiting from the collapsed exchange rate, where the lira has lost close to 80 percent of its value, making the country incredibly appealing for those with dollars to spend.

This hope may be short lived, though, as mounting operational challenges overshadow the positive economic impact created by those summer visitors’ spending, F&B and hotel operators told Arabian Business.

Lebanese expats constitute the majority of visitors to the country this season, especially since many had been unable to visit their home country for over a year due to coronavirus restrictions. An estimated 450,000 Lebanese residing in the GCC and Africa have visited Lebanon so far this summer, president of the Lebanese Hotels Association Pierre Achkar told the Kuwait News Agency.

“Those who did not visit Lebanon last year because of Covid-19 came this year and are benefiting from the exchange rate,” said Toni Rizk, CEO of hospitality management company TRI Concepts.

“Although we are increasing our prices (which are in Lebanese lira as per the country’s law) to match the dollar exchange rate, we are still retaining our customers since they find it cheaper than other vacation destinations. If it were not for those expats, we would not have been able to survive the season,” he continued.

Lebanon is facing its worst economic and financial crisis in decades with the lira losing over 90 percent of its value, currently at LL17,850 to the dollar and with fuel shortages and power cuts lasting up to 21-hours-a-day as privately-owned generators are unable to keep up with the demand.

But visitors to Lebanon seem largely undeterred by the dismal situation, instead benefiting from the currency devaluation to enjoy a reasonably-priced vacation.

“At the onset, the hospitality business in general felt that this season would be a good one despite the overall economic downturn. Things picked up well and reservations were up,” said Michel Abchi, chairman and CEO of Admic Sal, a multi-format retail operator based in Lebanon.

“Aside from the expats, many tourists – some having been to Lebanon before – decided to visit the country this summer. They were lured by the easing or lifting of Covid-19 restrictions and the currency devaluation which made the country’s main tourist attractions, beaches, bars, and restaurants more accessible and affordable” he explained.

Meals in Lebanon’s fanciest restaurants go for little more than $15 per person nowadays, alcohol included.

Visitors from Iraq, Jordan and Egypt are among the main tourists to Lebanon this year, said hospitality operators Arabian Business spoke to.

“Egyptians who would have normally summered in their country’s North Coast are opting to visit Lebanon because it’s become very cheap for them,” said Rizk.

“We have Lebanese expats and long-stayers but we also have European and Arab tourists, a bit of everything. Some of those are coming to the weddings of their Lebanese friends and taking this as an opportunity to explore the country,” said Christine Ozeir, owner of Bossa Nova Beirut Hotel.

“Despite the challenges, we are seeing a very good summer season and many expats who usually would stay with their families when visiting Lebanon are now opting for hotels because we can secure 24-hours electricity,” she continued.

Close to 700,000 of those residing in Lebanon and who are unable to travel abroad have opted for staycations in the country, thereby increasing hotel occupancy rates, according to Achkar.

As conditions worsen in the country, however, hospitality operators are beginning to feel the pinch.

“Things started to take a downhill turn with the increased electricity shortage, the fuel and petrol disappearing from the stations. It has negatively impacted the positive vibe that existed and now many hospitality operators are faced with total shut down for hours due to lack of electricity,” said Abchi.

“There are also many expats and tourists who are deterred by the lack of medicine and perceived lack of stability in the country and are deciding not to visit Lebanon,” added Ozeir.

Despite the increase in visitor numbers, hospitality operators are also struggling financially, given the mounting expenses and challenges they are facing.

Although Rizk’s venues have a bigger turnover than last year, the currency devaluation means he is making less revenue now, he revealed. “We are making small margins but at least we are making some money and are able to pay our employees,” said Rizk.

“The increase in activity comes with many challenges, mainly the energy situation in terms of securing diesel for generators and fuel for cars,” said Ozeir.

“Our main challenge is securing everything we need for the comfort of our guests. These are people who are coming here for vacation so we cannot transmit the worries of the country to them,” she explained.

Source:https://www.arabianbusiness.com/industries/travel-hospitality/466598-is-summer-tourism-the-salvation-for-lebanons-hospitality-operators

Egypt has agreed to supply natural-gas to Lebanon through Jordan and Syria as the Arab states seek to help end power shortages in their crisis-ridden neighbour.

Energy ministers from the four countries agreed during a meeting in Jordan on Wednesday to work out details of a plan to resume Egyptian gas shipments and Jordanian power to Lebanon. The gas will help feed the Deir Ammar power plant in Lebanon, which has a capacity of 450 megawatts, Egypt’s oil ministry said in a statement.

The agreement could help cut Lebanon’s need for the fuel that Iran had promised to ship to Lebanon last month. Dorothy Shea, the US Ambassador in Lebanon, later told Al Arabiya that the US was in talks with Egypt, Jordan and the World Bank to find sustainable solutions to Lebanon’s energy needs. The country has been experiencing worsening power outages amid dire economic and political crises.

Agreements covering the transit of fuel through the countries will be revised within the next three weeks, said Jordanian energy minister Hala Zawati at a press conference in Amman on Wednesday.

The Arab Gas Pipeline previously transported Egyptian gas to Lebanon via Jordan and Syria, but rising domestic demand crimped Egypt’s exports before a series of attacks on the line in war-torn Syria shuttered that route for gas to Lebanon completely about a decade ago.

The pipeline will need to be fixed before it can be used again, said Syrian Oil Minister Bassam Tohme after the meeting. Each state will send technical teams to inspect the pipeline over the next few weeks, he said.

While US sanctions on Syria remain in place, Jordan’s King Abdullah II discussed plans to reopen the pipeline with President Joe Biden on a visit to the White House in July, said Zawati.

Lebanon is working with the World Bank to secure guarantees to cover payments for the gas, said Lebanon’s Energy Minister Raymond Ghajar.

Source:https://www.arabianbusiness.com/industries/energy/468192-arab-states-agree-to-supply-gas-to-energy-hungry-lebanon

A bit of stability and normality – that’s all Lebanon’s private sector is asking for from the new government formed last week after a year of sectarian squabbling over cabinet seats.

“We’re not asking for much,” said Mirielle Korab-Abi Nasr, vice president of the Real Estate Developers Association in Lebanon (REDAL).

The caretaker government over the last year had little ability to pass laws or introduce legislation. Tycoon-turned-Prime Minister Najib Mikati will head the new 24-minister cabinet that will try to pull Lebanon out of worsening economic collapse and will try to kick-start talks with the International Monetary Forum for a badly needed bailout.

In the last year, the economy has deteriorated, joblessness is rising still, businesses have shuttered permanently, and the currency has lost over 90 percent of its value. An estimated 82 percent of the population has been plunged below the poverty line, according to UN figures released this month.

In the last month, more businesses have been forced to close as they couldn’t secure diesel to fuel privately owned generators that for years have plugged the gap that state-provided electricity failed to fill.

In a country where the government’s approach to the private sector can be seen as apathetic as best and a hindrance at worst, Lebanon’s competitiveness rating is 88th out of 141 countries in 2019’s Global Competitiveness Index.

Lebanon’s private sector, despite the government that reins over it, has done its best to thrive.

“Don’t hold us back,” Korab-Abi Nasr said, about the private sector, known for its innovativeness.

But those in the private sector know this government isn’t the answer to their many problems.

Arabian Business asked one analyst if the recent government formation signalled a bright spot for the private sector or if the sector would have to pull itself up by its bootstraps, as has been the case for years?

Lebanon’s private sector calls for ‘stability and normality’ amid ongoing crisisMirielle Korab-Abi Nasr, vice president of the Real Estate Developers Association in Lebanon (REDAL).
“Well, I mean, the latter is obviously going to be the case,” said Sami Halabi, the director of policy and co-founder of Triangle, a development, policy and media consulting firm.

The private sector’s structure is intrinsically linked to Lebanon’s sectarian system that is blamed for the country’s woes as it creates and relies on patronage networks to survive.

“And I don’t think that Mikati or anybody else in the government is going to address those shortcomings to open space for [the] private sector to be more competitive or allow new players to enter the space, because it’s not in the interest of sectarian power brokers to do so,” he said.

Innovating for fundamentals
And for now, the government has more fundamental problems to address. Bread and medicine shortages have deepened. Cell service is patchy and Wi-Fi depends on electricity, which there is now only a few hours of per day. Many modern-day jobs have become nearly impossible to do.

A fuel crisis means the city has descended into darkness, and a cab crossing town has to stop to siphon fuel from a fellow cab driver’s car or wait in kilometre-long lines at gas stations – many of which either don’t have fuel or are hoarding it to sell at a higher price later as subsidies stop. Now, water shortages are emerging, with UNICEF last month warning 70 percent of the population faces critical water shortages.

“We are innovative, but unfortunately now we have to be for the basics, rather than being innovative in the real sense of the word and creating something new for our businesses to make them grow,” Korab-Abi Nasr said. “Everyone I know around me in the private sector is struggling to stay.”

One of the first tasks the new government faces is restarting talks with the IMF, which President Michel Aoun on Monday said he intends to resume.

The new government formation has opened a pathway to return to talks with the IMF. Headed by Mikati, Lebanon’s cabinet will seek to begin making necessary reforms that previous governments have failed to make. The reforms are necessary to unlock billions of dollars of badly needed international aid. But few have faith this government will get the job done.

“I don’t see any reason why this government would have more success than the previous,” Halabi said. “So we’re going to go to a situation where you have a wider gulf between haves and have not, the private sector will try to cater to the haves.”

Mikati served as prime minister previously from 2011-2014, and he “usually comes in at times when there’s a need for a transition”, Halabi said, adding that his policies are geared towards economic outputs, like adding capacity to the heavily subsidised electricity sector that bleeds billions annually from state coffers.

This time around, the electricity issue is an even bigger challenge, and other issues range from investing in proper infrastructure, vocational training, export boosting measures (Lebanon imports some 80 percent of its food, but it is increasingly focusing on local production), and clamping down on smuggling of fuel and medicine across the Syrian border to the east, according to Paul Abi Nasr, a board member on the Association Of Lebanese Industrialists.

“A couple of regulations that need regulatory structures in specific sectors such as energy, renewable energy, transport, or telecoms would go a long way to opening up private sector opportunities,” Halabi said.

What’s primarily missing is the regulation, which has been drafted. It just needs to be signed.

“This could change under a new government, because all of the work has basically been done. And it will require a lot of a lot of politics, a lot of horse trading [in the] government,” he said. “Now, is that high on the agenda of the government? I’m not really sure it’s first on their agenda.”

Lebanon’s finance ministry on Monday said the central bank would receive $1.135 billion on September 16 in IMF Special Drawing Rights, which is an international reserve asset designed to supplement member countries’ official reserves. The small Mediterranean country’s reserves have dwindled rapidly since a dollar shortage emerged in mid-2019; needed to pay for imports, the lack of greenbacks has caused shortages of basic goods.

Even if the government can secure quick wins to gain popularity – like passing into law legislation that has been waiting for signatures – it will have little trickle-down effect on the starved private sector, according to Halabi. Structural reform takes years, and the problems created by current structural issues are only deepening.

“The private sector is not going to see the effects,” Halabi said. “We’re not really looking at any short-term outcomes on the economic side of things, except for hopefully, some movement on the IMF package.”

Source:https://www.arabianbusiness.com/middle-east/468399-lebanons-private-sector-asks-for-stability-normality

The role of remittance inflows has shifted from developing human capital to meeting basic needs following the outbreak of the crisis with 72 percent of recipients using remittances to sustain their lifestyle or make minor changes, according to The Increasing Role and Importance of Remittances in Lebanon, a report released by United Nations Development Programme (UNDP).

“Before the crisis, remittances were used by households to invest in building human capital, such as health and education. Following the outbreak of the crisis, the role of remittances has changed. They are now primarily used to meet the basic and survival needs of recipient households. These needs include food, rent, and electricity bills. Today, remittances in Lebanon serve as a social safety net for these households,” the UNDP said.

According to Melanie Hauenstein, UNDP Resident Representative in Lebanon, very cheap global digital solutions for transferring money exist but they are not currently activated in Lebanon due to the banking and financial crisis and the difficult economic situation in addition to the lack of required regulations and laws. “This is the reason why expat transfers to Lebanon are often much more expensive than the cost of transfers to other countries. This is because there is less competition,” she said.

The average cost of sending remittances to Lebanon stands at 11 percent, which is significantly higher than the global average of six percent, and also exceeds the average in other countries in the Middle East and North Africa (MENA). “As a result, there has been a shift from formal to informal channels, such as in-person cash handouts, for receiving remittances. These informal inflows are captured by the formal Central Bank figures and constitute around 70 percent of the inflows during the crisis, based on estimations of airport flows of Lebanese expatriates,” the report said. According to Hauenstein, expats won’t have to bring money in suitcases when they can resort to cheap registered digital transfers which can also be tracked and allow the enforcement of accountability.

Lebanon’s remittance-to-GDP ratio reached close to 38 percent in 2022, the highest in the MENA region. This reflects more a shrinking GDP rather than an increase in remittances. Lebanon, despite its size, is ranked as the MENA’s third largest recipient of remittances in terms of value after Morocco and Egypt.

The UNDP recommends measures to tap the substantial size of remittances and the strong connection between the diaspora and Lebanon in order to channel these inflows into economic development. There is an opportunity to channel these inflows into investment in local development and recovery initiatives and to use them to reverse development losses, the report said.

The required measures include developing a transparent and coherent measurement of remittances, restoring the confidence of expatriates in the economy, strengthening the basic infrastructure to create an enabling business environment for investors, allowing alternative means to facilitate transfers such as digital finance, reducing transfer fees to encourage transfers through official channels, and investing in diaspora bonds once trust is restored.

“Policymakers and financial institutions may consider investing in diaspora bonds. These bonds are usually promoted as ‘an alternative to borrowing from the international capital market, multilateral financial institutions or bilateral loans from Government’. Such an instrument could provide expatriates with attractive interest rates or deposit guarantee schemes so that they are encouraged to invest in Lebanon and raise the sense of patriotism among the diaspora. Several countries, such as India and Ethiopia, managed to mobilize development financing using diaspora bonds,” the report said.

Source:http://www.businessnews.com.lb/cms/Story/StoryDetails.aspx?ItemID=11221

The Holy Makkah Municipality has said that the cleaning contracts for this year’s Hajj included 13,549 workers, drivers, supervisors and observers of cleanliness.

Of the 13,549 workers, 7,250 have been allocated to work in the holy sites. A total of 912 pieces of cleaning equipment have been deployed — 438 of them in the holy sites.

The Municipality operated six mobile cleaning stations in the holy sites, in addition to distributing nine waste compactor trucks to support the system of general cleaning work during Hajj.

According to a report issued by the Municipality, the total waste generated in 12 days since the beginning of the month of Dhu Al-Hijjah exceeded 68,000 tons.

The Holy Makkah Municipality indicated that it had provided a temporary storage system for waste — 111 ground storage and 1,071 compact boxes distributed to the holy sites to be used according to the operational plan.

The cleaning plan for this year’s Hajj season began before the arrival of the pilgrims, as the holy sites were equipped in all aspects, such as maintenance work and arranging the places used by the pilgrims during their arrival.

To protect the cleaners from fatigue and sunstroke, the work was divided this year into two morning and evening shifts, avoiding the noon hours, as Hajj this year is coinciding with the peak summer.

These efforts come from the great care the Holy Makkah Municipality attaches to hygiene and environmental sanitation during the Hajj season, as it relates to the health and environmental aspects that accompany pilgrims throughout their journey in Makkah and the holy sites.

Source:https://www.saudigazette.com.sa/article/633859/SAUDI-ARABIA/Hajj-2023-Over-68000-tons-of-waste-generated-in-12-days