Lebanon’s path back from the brink of collapse

Development Matters New social contract , ,

By Dr. Nasser Saidi, Economist and former Minister of Economy and Industry of Lebanon

Beirut, Lebanon – August 2020: Beirut Port destroyed following explosive blasts. Photo: Shutterstock

Since October 2019, Lebanon has been in the throes of a historically unprecedented economic and financial meltdown, simultaneously facing a humanitarian crisis, a debt crisis, a banking crisis, a currency crisis, and a balance of payments crisis. The numbers are staggering. Real GDP has declined for the fourth consecutive year by a cumulative 45% since 2018 making it the second most severe financial crisis in history. The Lira has lost 90% of its value, annual inflation is running at 150% and an 80% de facto haircut has been imposed on deposits.

These multiple crises impose terrible human costs. Unemployment exceeds 45% of the population, with 77% in poverty and 40% in extreme poverty. There are basic commodity shortages and long queues for fuel, bread and medicine. Government-provided electricity is rationed at about three hours per day; the majority of the population relies on expensive private generators. The monthly minimum wage is now the equivalent to $40 (below Bangladesh), a soldier’s salary is $76 while a judge earns $247. People seeking to escape have fuelled an unprecedented wave of emigration of professionals (doctors, consultants, engineers and teachers), other skilled workers and youth. Lebanon’s human capital is leaving.  The four main pillars of the economy, trade and tourism, health, education, and banking and finance, are being destroyed.

At present, Lebanon, after a thirteen-month deadlock, has formed a new government under Prime Minister Najib Mikati. The priority today is to restore trust and confidence in government and the banking sector.

But first, why and how did Lebanon descend into economic collapse?

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Intermediate cities and climate action: driving change through urban land use and governance

Development Matters Green transition , , ,

By Oliver Harman, Cities Economist for Cities that Work, International Growth Centre

In the first blog of this two-part series, it was argued that intermediate cities, through strong rural-urban linkages, especially in low-income settings, can provide an important social safety net in addition to their potential to alleviate poverty in the long-term. Moreover, and although largely undervalued by the international community and countries, intermediate cities can foster both short term climate adaptation and longer term climate mitigation. Namely, two areas currently under climatic strain stand to generate substantial gains through proactive policy: urban land use and municipal finances and urban governance. Through citizen driven mandates and by designing interventions that localise climate issues, stakeholders in climate action can help drive change in this area.

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Intermediate cities: a missing piece in the climate change puzzle

Development Matters Green transition , , ,

By Oliver Harman, Cities Economist for Cities that Work, International Growth Centre

Research and debate on climate change currently underestimate the importance of a key group of players: intermediate cities. Currently conversation and studies on climate change often centre on large and relatively wealthy capital cities. Their size in population, data availability and comparatively higher energy use per person are factors that draw attention. In comparison, low income intermediate cities (or small and medium sized cities) – those cities that play a linking role between rural and urban, and between cities of different sizes – are often left undervalued in the debate. This is despite these cities (particularly those equatorial or coastal in nature) facing disproportionate risks to climate shocks and stressors. They are vulnerable, and this vulnerability is increasing with rapid urbanisation, while they continue to face limited human and financial capacities.

Of the 100 fastest growing cities, some with populations under one million, the Climate Change Vulnerability Index shows that 84 of them, primarily in Africa, are at extreme risk. The findings from the 1,800 studied cities highlight the lack of adequate healthcare services and disaster mitigation systems, as well as vulnerable populations, as drivers of this exposure. Lower incomes in intermediate cities are another example of vulnerability with, for instance, citizens in primary city districts in Uganda having three times the GDP per capita (USD 2,440) than those in Secondary Districts (USD 719).

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It’s time to move beyond a debt moratorium and finance productive capacities in least developed countries

Development Matters Building resilience, Reviving multilateralism , ,

By Paul Akiwumi, Director, Division for Africa, LDCs and Special Programmes, UNCTAD

According to recent UNCTAD analysis, most LDCs will likely take several years to recover the level of GDP per capita they had in 2019, and compared to developed countries, which may experience a short V-shaped recovery, the median LDC would take roughly three years to climb back to pre-COVID-19 levels of output per capita. Moreover, extreme poverty in LDCs is projected to rise to 35%, equivalent to 32 million people, due to the pandemic.

Confronted with looming fiscal distress, LDCs will need further long-term support to recover and address the structural economic challenges they face. Beyond the recovery, for LDCs to achieve inclusive development, global action should be geared towards supporting LDCs build their underdeveloped production systems.

Looming fiscal distress

For many LDCs, COVID-19 has precipitated a fiscal crisis. Rising health-care expenditures, slowing trade and support programmes to smooth consumption have increased already high debt levels in these countries.

Before the onset of the COVID-19 crisis, five LDCs were already in debt distress and 13 more were at high risk of debt distress.  Most of these LDCs had received debt relief only 10 to 15 years earlier, under the Heavily Indebted Poor Countries Initiative or the Multilateral Debt Relief Initiative.

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Digitalização como estratégia anticorrupção: quais são os dividendos de integridade de se tornar digital?

Development Matters New social contract , , ,

Carlos Santiso, Diretor de Inovação Digital do Estado do Banco de Desenvolvimento da América Latina

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A resposta à crise do coronavírus está fornecendo uma oportunidade única para reinventar o governo, reconstruir a confiança e acelerar a luta global contra a corrupção, impulsionada pelo uso mais inteligente de novas tecnologias e análises de dados. A transformação digital é fundamental para os planos de recuperação, que exigirão governo ágil e redução da burocracia, mas também programas de reativação à prova de corrupção. Também exigirá o gerenciamento e a mitigação dos riscos à privacidade e à segurança pública.

A correlação entre digitalização e corrupção está bem estabelecida. A digitalização pode interromper a corrupção reduzindo a discrição, aumentando a transparência e permitindo a responsabilização, desmaterializando os serviços e limitando as interações humanas. Além disso, permite uma supervisão mais eficaz por instituições de responsabilidade mais inteligentes e sociedade civil com experiência em dados. No entanto, há menos evidências acionáveis ​​no nível micro sobre os efeitos de reformas específicas da digitalização sobre os diferentes tipos de corrupção e os canais de política através dos quais operam.

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La digitalización como estrategia anticorrupción

Development Matters New social contract , , ,

Por Carlos Santiso, Director, Dirección de innovación digital del estado de CAF – Banco de Desarrollo de América Latina

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La respuesta a la crisis del coronavirus está brindando una oportunidad única para reinventar el gobierno, reconstruir la confianza y acelerar la lucha mundial contra la corrupción, impulsada por el uso más inteligente de las nuevas tecnologías y el análisis de datos. La transformación digital es un aspecto fundamental de los planes de recuperación, que requerirán gobiernos ágiles y reducción de la burocracia, pero también garantías de integridad en el uso de los recursos de los programas de reactivación. También requerirá gestionar y mitigar los riesgos para la privacidad y la ciberseguridad.

La correlación entre digitalización y corrupción está bien establecida, aunque no las relaciones de causalidad. La digitalización puede alterar las oportunidades de corrupción al reducir la discreción, aumentar la transparencia, y permitir la rendición de cuentas al desmaterializar los servicios y limitar las interacciones humanas. Además, permite una supervisión más eficaz por parte de instituciones de rendición de cuentas más inteligentes y una sociedad civil conocedora de los datos. Sin embargo, hay menos evidencia accionable sobre los efectos de reformas específicas de digitalización en diferentes tipos de corrupción y los canales de políticas a través de los que operan.

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Digitalisation as an anti-corruption strategy: what are the integrity dividends of going digital?

Development Matters New social contract , , ,

By Carlos Santiso, Director, Digital Innovation in Government Directorate, Development Bank of Latin America

The response to the coronavirus crisis is providing a unique opportunity to “reinvent government”, rebuild trust and accelerate the global fight against corruption, propelled by the smarter use of new technologies and data analytics. Digital transformation is central to recovery plans, which will require agile government and cutting red-tape, but also corruption-proofing reactivation programmes. Additionally, it will require managing and mitigating the risks to privacy and cybersecurity. At a macro level, the correlation between digitalisation and corruption is well established. Digitalisation can disrupt corruption by reducing discretion, increasing transparency, and enabling accountability by dematerialising services and limiting human interactions. Furthermore, it allows for more effective oversight by smarter accountability institutions and data-savvy civil society. However, there is less actionable evidence at the micro level on the effects of specific digitalisation reforms on different types of corruption and the policy channels through which they operate.

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Forced displacement in 2021: much to commemorate, little to celebrate

Development Matters New social contract, Reviving multilateralism ,

 By Martin Wagner, Senior Policy Advisor Asylum, ICMPD, Caitlin Katsiaficas, Policy Analyst, ICMPD, and Benjamin Etzold, Senior Researcher, BICC

Photo: Ververidis Vasilis, Shutterstock

This year, we celebrate 70 years since the 1951 Geneva Refugee Convention was signed. While the Convention has aged relatively well since its inception and has remained relevant for so long, global developments have left their mark. Ever more protracted, mostly internal, conflicts make true solutions for displaced people scarce. As a consequence, UNHCR has sounded the alarm on the growing numbers of displaced persons, virtually every year for the past decade, on the occasion of World Refugee Day (20 June). As expected, the 2020 figures presented at this year’s world refugee day were no different.

The international community, spearheaded by UNHCR, has taken considerable action to tackle this trend, seeking global allies to expand access to solutions for refugees who have little chances for return or resettlement. The Global Refugee Forum, created to promote the 2016 Global Compact on Refugees, mobilises a broad array of actors and initiatives committed to its objectives. Two of these goals are: 1) building opportunities for refugees to become self-reliant and 2) expanding third-country solutions (through resettlement for the most vulnerable and other safe and legal pathways for refugees to complement resettlement).

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Least Developed Countries have 13 years to meet global trade rules, but still lack critical flexibility at the WTO

Development Matters Building resilience, Reviving multilateralism , ,

By Rachel Thrasher, Researcher, Boston University Global Development Policy Centre

By only granting a 13-year extension in a critical time for economic recovery from COVID-19, Members of the World Trade Organization may be creating more severe challenges for Least Developed Countries and the global economy down the road.

Without much fanfare, on June 29, 2021, the member countries of the World Trade Organization (WTO) quietly agreed to extend the transition period for least-developed countries (LDCs) to implement the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) for another 13 years.

The recently granted extension falls substantially short of what was requested, though it is slightly longer than the previous two nine-year extensions. The news has received relatively little attention in the midst of negotiations for vaccine access and pandemic fears about new vaccine-resistant variants, but to be sure, the failure to acknowledge the need for a longer-term transition period has substantial impacts for LDCs’ development trajectories.

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The European Union as a development superpower

Development Matters Asia, Development in Transition, Reviving multilateralism , , , ,

By Ambassador Dr Mohan Kumar, Chairman, RIS, Dean/Professor, Jindal Global University, Sonipat, India, Former Indian Ambassador to France1

It is a truism that the European Union (EU) welcomes, prefers and supports a multipolar world; a strategic world view that is fully shared by its partners like India. More fundamentally, it is in the interest of the EU and its like-minded partners to ensure that the international order is not underpinned by a G2 system of government where the rules are essentially shaped by the US and China. This, however, entails the EU being strong enough to occupy an independent pole in the multipolar system. The EU is not quite there yet, but its friends and partners will certainly wish this to occur, sooner rather than later.

The other strategic dictum that is worth noting is this: a multipolar world is scarcely possible without a multipolar Asia. And a multipolar Asia is not necessarily a given; it needs to be ensured with collective action based on an agreed set of rules. It is my view that the EU has an important role in ensuring that Asia remains multipolar.

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