Leaders Club (by Lebanon Opportunities) Relaunch 2025 Report outlines an ambition and comprehensive plan for Lebanon’s economic recovery, emphasizing a shift from liquidation-oriented approaches to strategies focused on sustainable growth. The plan critiques previous recovery efforts for their narrow focus on the financial sector and lack of comprehensive reforms. Instead, it proposes an alternative framework that prioritizes economic growth, public trust, and inclusive stakeholder participation.
Previous government recovery plans predominantly focused on the financial sector, neglecting crucial fiscal, administrative, social, and broader economic reforms. These plans unintentionally exacerbated economic challenges: defaults reduced liquidity, subsidies depleted foreign exchange reserves, unofficial capital controls triggered capital fight, and the artificial maintenance of the lira’s exchange rate fostered black market activities. Superficial adjustments to these plans have proven ineffective, underscoring the need for a radical shift in priorities and methodologies. The alternative plan emphasizes a participatory approach involving diverse economic stakeholders such as trade organizations, labor unions, and professional associations. Rather than starting with the estimation of financial losses, which represents a liquidation mindset, the plan focuses on future-oriented strategies that prioritize job creation, wage increases, and balancing state revenues and expenditure. Building consensus on less contentious issues first allows for a gradual approach to addressing more divisive topics as public trust and economic stability improve.
The plan is structured to initiate immediate economic stimulation and ensure long-term sustainability. It advocates for the establishment of a new socio-economic pact aimed at creating balanced policies concerning public sector wages, minimum wages in the private sector, social protection, and taxation. This pact includes a rescue and recapitalization plan for the National Social Security Fund (NSSF), which is critical for providing social safety nets. Furthermore, the plan proposes reviving banking activities with “new money,” ensuring financial stability by shielding fresh funds from liabilities uncured before 2019. This approach aims to restore confidence in the banking sector, encourage new investments, and facilitate new economic recovery.
Another cornerstone of the plan is the liberalization of the exchange rate, which would eliminate the Central Bank’s need to maintain large foreign exchange reserves. This measure is expected to stabilize the current account naturally through market mechanisms. Public debt restructuring is also emphasized, with strategies that include debt forgiveness mechanisms and the restructuring of foreign currency debt to significantly reduce the national debt burden. This would alleviate fiscal pressures and create a more sustainable debt environment, fostering economic resilience.
In addition to fiscal reforms, the plan advocates for the privatization of public utilities such as electricity and telecommunications. These sectors would be managed by a Sovereign Holding Company (SHC), enhancing efficiency through private sector expertise. These revenues generated would be directed to public funds, supporting poverty alleviation initiatives. The Poverty Alleviation Fund, funded by state resources, SHC revenues, and international donors, would replace inefficient subsidies with direct support for vulnerable populations, ensuring a more targeted and effective social safety net.
Fiscal policy reforms are designed to be implemented in phases, focusing initially on achievable targets. This includes the temporary elimination of direct taxation for most sectors, except for the financial sector, insurance, and large holding companies, while increasing indirect taxes to sustainable levels. This phased approach allows for economic stabilization and sets the stage for comprehensive tax system overhauls in the future. According to Leaders Club, Measures to stimulate private sector growth are also outlined, with over 250 initiatives aimed at removing barriers and incentivizing development across various sectors. Additionally, the plan emphasizes the importance of accelerating oil and gas exploration in uncontentious maritime areas to enhance Lebanon’s economic prospects and improve its risk profile.
Short term expectations from the plan include significant GDP growth, job creation, increased public and private sector wages, and improved fiscal health. The objective is to restore confidence in the state and financial systems, enhance consumer spending, and attract investments. Medium term goals focus on administrative reforms to modernize the public sector, streamline government functions, and integrate digital governance. These reforms are essential for creating an efficient, transparent, and accountable government that can support sustained economic growth and development.
While focusing on future growth, the plan does not overlook the importance of addressing past financial liabilities. It proposes a moratorium on repayments during the initial revival phase, with negotiations to determine fair repayment terms based on economic recovery outcomes. This approach acknowledges the reality of past financial mismanagement while prioritizing the need for economic stabilization and growth. The strategy also highlights the existence of substantial reserves, estimated at $35 billion ($25 billion in gold and more than $10 billion in foreign currency reserves totaling more than 100 percent of GDP), which should be utilized to support future economic growth rather than covering past losses. This forward looking approach aims to create a sustainable economic environment that benefits all segments of society.
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