Lebanon launches grocery card program, but where’s the money? | Business | Economic and financial news from a German perspective | DW

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Lebanese Social Affairs Minister Hector Hajjar recently announced the introduction of a long-deferred ration card program and other temporary economic measures to provide some relief to Lebanese citizens trapped in poverty.

The program is designed to help the most vulnerable families. The economic package is worth the equivalent of 492 million euros (556 million US dollars). 700,000 households should benefit from this. You’re supposed to get up to $ 126 per month for a year.

Eligible families have started to apply for the so-called IMPACT program. However, beneficiaries of the program will not receive payments until March 2022, but will receive the money retrospectively for January and February.

Hajjar also announced the start of registration for the Emergency Social Safety Net (ESSN, or Aman Project), a $ 246 million program funded entirely by the World Bank.

Announcing the initiatives, the minister said the projects were not the solution to all Lebanon‘s problems, but should provide citizens with a temporary lifeline while the government worked out a deeper economic plan.

More than half of the population now lives in poverty, while a persistent political crisis heralds another economic collapse

Support without funding

But while the ESSN project has the financial support, that seems to be lacking in the food card program.

In an interview for the English edition of the local newspaper L’Orient-Le Jour, the Regional Director of the World Bank, Saroj Kumar Jha, said the Lebanese government had made a formal application to the World Bank to fund the food card program. Although Jha noted that the World Bank was ready to look into the application, he said the Lebanese government should fund part of the program from its own budget.

For a money-poor country like Lebanon, finding funding for a temporary program to assist thousands of Lebanese people can be challenging. Since Lebanon plunged into an economic and financial crisis in 2019, poverty has risen by up to 80%; the local currency has lost 90% of its value and foreign exchange reserves have declined by $ 15 billion.

Lebanese economist Roy Badaro told DW that there was no money to fund the ration card program. However, he believes the government could use some of the over $ 1 billion in Special Drawing Rights (SDRs), an international currency reserve provided by the International Monetary Fund (IMF).

“The government could also use bank deposits or ask for humanitarian aid from France, the European Union (EU) or the World Bank. However, I suspect that the ration card program will not be funded for the time being, unless the government shows a comprehensive economic plan. “, Argued Badaro.

Leila Dagher, associate professor of economics at the American University of Beirut and a senior fellow at the Lebanese Center for Policy Studies, tells DW that if the government reaches an agreement with the IMF, the government may have other options besides using SDR.

While the beneficiaries of the ESSN project are paid in dollars, those who have access to the Ration Card program could receive payments in dollars or the Lebanese pound at the central bank’s sayrafa rate, which is lower than the real market rate.

When asked why the government had not specified the currency in which it would pay those eligible for the Ration Card program, Dagher said that the payout currency has been a hotly debated issue among politicians for months. “The decision should be based on the advice of experts in the field, and I’m sure any experts would recommend paying in US dollars,” she said.

For Badaro, the food card program doesn’t have to be sustainable. In his opinion, it should only be available for a transitional period until the government reaches an agreement on rebuilding the Lebanese economy. “Otherwise we would press people to slander,” he said.

Households can apply for both the food card program and the ESSN project. But Dagher says that once the applications are processed, each household would be informed which program they might be eligible for. “This minimizes possible double dipping. In addition, the requirement to provide a copy of a valid photo ID for each member of the household helps prevent abuse, ”she said.

The Hezbollah factor

Although economist Badaro believes the government may have some ideas on how to reschedule the nation, he said until Hezbollah remained part of the government it would not allow any action that could harm its electorate. “I don’t think there will be a feasible economic plan while Hezbollah is in government,” he said.

The government has not met for more than two months because of the political polarization surrounding the Beirut Explosion investigation, as the Shiite parties Hezbollah and Amal are demanding the removal of Judge Tarek Bitar. The lawyer was attacked by influential political forces and religious leaders in Lebanon for summoning former ministers and high-ranking security officials to investigate the explosion.

A poster with a picture of judge Tarek Bitar is set on fire by supporters of the Shiite Hezbollah and Amal groups during a protest in front of the Palace of Justice in Beirut, Lebanon, on October 14, 2021.

Clashes erupted in Beirut in October when Hezbollah supporters protested against Judge Tarek Bitar, who is investigating the port’s deadly explosion last year

As a result, most of the economic and financial initiatives to develop the IMF financial package have not yet been implemented. However, the government hopes to reach an agreement with the IMF by the end of the year.

Edited by: Hardy Graupner, Ashutosh Pandey


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