We are barely surviving, people in Lebanon are growing more desperate day by day. The terrifying economic situation is posing the biggest threat to the country’s stability with triple digit inflation and a projected increase of people under the poverty line. In response to the compounded crisis, the World Bank Group (WB) is launching the Emergency Crisis and COVID19 Response Social Safety Net Project (ESSN) to help the poorest Lebanese families. In parallel, the Lebanese Central Bank has adjusted the Basic Circular 147 and issued the intermediate circular no 579 aiming to ensure the smooth running of the banks based on the principle of the continued functioning of public utilities.
Briefly, the Basic Circular 147 and the intermediate circular 579 (issued on 03/09/2019 and 29/01/21, respectively) are addressed to Lebanese banks in relation to accounts-opening procedure, of which banks are required to obtain a copy of the registration certificate at the Ministry of Finance when they open a new account. In addition, they had to implement measures to update their customer’s files by the granted time limit ending at year 2020. Moreover, banks must comply with the decrease in deposits rates as the rate ceiling set for the deposits they receive or renew as per the circular. Most importantly, banks must notify the Banking Control Commission of all deposits or transfers originating from donations in foreign currency made by international institutions or donors, in order to be distributed to the concerned beneficiaries at the suggested exchange rate of 6,240 LBP per USD (60 % above the 3,900 rate) once the approval is granted by the Lebanese Parliament.
The World Bank approved a new US $246 million on January 12, 2021 which promises to provide emergency cash transfers to approximately 786,000 poor and vulnerable Lebanese wobbling under the economic and COVID19 crisis. In details, the ESSN project aims to support 147,000 extreme poor Lebanese households with cash assistance for one year. In addition, eligible households will receive a monthly transfer of LBP 100,000 per household member along with a flat amount of LBP 200,000 per household.
The World Bank added that those transfers will be credited monthly onto a pre-paid card issued by a financial service provider and distributed to beneficiary households who can cash out the amount by any automated teller machines, or use it to make e-payments for purchases in food shops. Furthermore, 87,000 children between the ages of 13-18 year will receive a top-up cash transfer to cover the direct costs of schooling.
It is crucial to highlight that the program will scale up Lebanon’s national poverty targeting program as it will adopt the Proxy Means Testing (PMT) that presents manual to identify eligible households across all Lebanon. Most importantly, this program will support the development of a comprehensive social safety net delivery system that can respond to future shocks, which will allow the efficient identification of households to receive social assistance as per their needs and living conditions.
Finally, the ESSN project will be applied by the Presidency of the Council of Ministers through the National Poverty Targeting Program Unit in cooperation with the Ministry of Social Affairs, the Ministry of Education and Higher Education, and under the guidance of the Inter-Ministerial Committee for Social Affairs chaired by the Prime Minister. The loan still awaits the approval of the Parliament to become officially effective.