Complex Made Simple

Lebanon economy: The true face of corruption in infographics and numbers

Lebanon is erupting against corruption. All you need to know here

Nearly all Lebanese (93%) said in 2018 that corruption is widespread in their government Almost 90% of public procurement and tenders are being arranged through consensus and barter The burden on financial institutions is light, while indirect taxes paid by everyone, such as value-added tax (VAT), are increasing

A barren economy forces many young Lebanese to leave the country for jobs.

Around a third of the country lives under the poverty line, according to the World Bank.

The crisis has been exacerbated by an influx since 2011 of 1.5 million Syrian refugees, representing about a quarter of the country’s population.

Landfills and beaches are overflowing with trash

But the last month, a faltering currency, crises over wheat and gas and devastating forest fires for which the government was unprepared for firefighting plus a tax on WhatsApp calls finally led the Lebanese to erupt calling for the downfall of the government.

What state of corruption is Lebanon in?

Read: S & P: Does Lebanon have sufficient foreign currency reserves?

People know

Nearly all Lebanese (93%) said in 2018 that corruption is widespread in their government. The percentage saying so hasn’t been lower than 90% since 2013.

Widespread corruption

Lebanon’s confessional power-sharing arrangements fuels patronage networks and clientelism, which undermines the country’s governance system.

On Sunday, 6 May, 2018 voters in Lebanon took part in the first Parliamentary elections in nine years. A new Lebanese law permitted cabinet ministers to run for Parliament while still holding office. The new law set a considerably high spending ceiling for political candidates, allowing them to spend large amounts of funds on campaign activities.

Almost 90% of public procurement and tenders are being arranged through consensus and barter without going through official channels of the tenders’ office

Lebanon is ranked 142 among 190 economies in the ease of doing business, according to the latest World Bank annual ratings. 

Read: Fitch downgraded Lebanon; what do big banks think? By Credit Benchmark

With nearly $100 billion in public debt, the country’s debt-to-GDP ratio of 150% trails only Greece and Japan. 

Petty corruption is widespread in the institution; bribes and irregular payments are often exchanged to obtain favorable judicial decisions.

World corruption ranking

Central bank reserves plunged 30% in the past year and the local currency is slipping against the dollar in recent months.

$11bn in soft loans and grants called “Cedre” have been suspended for Lebanon’s inability to implement reforms. 

Lebanon: Everything you need to know about how to solve the debt crisis

Fundamental numbers and issues to look at

The country depends on imports. A currency devaluation would raise prices for imported goods and erode living standards. 

The decision by Lebanese banks this month to ration access to U.S. dollars alarmed Lebanese.

The banks rely on wealthy Lebanese and especially the diaspora to deposit their money in Beirut. About 1% of all accounts are estimated to hold roughly half of total deposits.

Lebanon’s unproductive rentier economy revolves around banking and real estate, which creates, as a result, great income inequality.

The burden on financial institutions is light, while indirect taxes paid by everyone, such as value-added tax (VAT), are increasing.   

More debt means less capacity to deliver public services amid an intensifying environmental crisis.    

The dysfunctional electricity system forces households to pay excessive fees for access to private generators. 

Households rely on bottled water because tap water quality is poor.  

During previous times of crisis, friendly Gulf governments would restore investor confidence in the central bank’s ability to defend the currency through well-publicized emergency cash transfers. Such support has grown uncertain