ESCWA Publication: E/ESCWA/CL3.SEP/2021/TP.21
Country: Lebanese Republic
Publication Type: Information material
Cluster: Shared Economic Prosperity
Focus Area: Financing for development
Initiatives: Transport and trade connectivity
SDGs: Goal 8: Decent Work and Economic Growth
Keywords: Trade financing, Economic development, Economic integration, Export development, Technical cooperation, Economic conditions, Evaluation, Indexes, Poverty, Recommendations, Social conditions, Social policy, Arab countries, Latin america, Western sahara, South asia, East asia, Banking, Economic crisis, Exports, Financial aspects, Imports, Macroeconomics, Trade policy, Trade financing
Trade finance in Lebanon: a recipe for collapse
March 2022
The COVID-19 pandemic came at the heel of an already existing grave economic crisis that has affected all operating sectors of Lebanon and has revealed the structural weaknesses of the country’s fiscal and monetary framework. The pressure generated by the crisis on the country’s banking sector and its monetary policy resulted in the creation of a system of multiple exchange rates, which have weighed heavily on all trading activities between Lebanon and the rest of the world.
Trade finance activity, in the once fully dollarized economy, has been hindered by an impaired banking sector, foreign exchange shortage, and fast collapsing currency leading to a more than 80 percent decrease in trading activity. Until today, with the absence of an efficient and well-functioning macroeconomic stabilization plan, recovery from this economic meltdown appears to still be challenging. Lebanon needs to adopt a comprehensive and coordinated strategy that brings financial stability in order to promote growth and development across the country’s productive sectors. Without such a comprehensive reform programme, it is impossible to foresee a reasonable relaunch of Lebanon’s trading activity even after the COVID-19 pandemic.
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Financing for development
,
The COVID-19 pandemic came at the heel of an already existing grave economic crisis that has affected all operating sectors of Lebanon and has revealed the structural weaknesses of the country’s fiscal and monetary framework. The pressure generated by the crisis on the country’s banking sector and its monetary policy resulted in the creation of a system of multiple exchange rates, which have weighed heavily on all trading activities between Lebanon and the rest of the world.
Trade finance activity, in the once fully dollarized economy, has been hindered by an impaired banking sector, foreign exchange shortage, and fast collapsing currency leading to a more than 80 percent decrease in trading activity. Until today, with the absence of an efficient and well-functioning macroeconomic stabilization plan, recovery from this economic meltdown appears to still be challenging. Lebanon needs to adopt a comprehensive and coordinated strategy that brings financial stability in order to promote growth and development across the country’s productive sectors. Without such a comprehensive reform programme, it is impossible to foresee a reasonable relaunch of Lebanon’s trading activity even after the COVID-19 pandemic.
