Arab NGO Network challenges World Bank's reform agenda in Lebanon
22 August 2007
Local CSO observers argue that instead of addressing the root causes of the economic and social challenges facing Lebanon, the World Bank is promoting a "one-size-fits-all" formula of privatization and liberalization in various sectors. To deal with the adverse impacts of these reforms, the Bank is proposing limited social safety net programs. But groups like the Arab NGOs Network for Development say what the country needs is a comprehensive strategy for economic and social development including policitical and administrative reforms.
The following article is reproduced from the Arab NGOs Network for Development (ANND)
Bank’s reform agenda in Lebanon promotes privatization, liberalization and selective social safety nets, over more comprehensive socio-economic development program
By Ziad Abdel Samad, Executive Director of the Arab NGOs Network for Development (ANND)
[The Government of Lebanon (GOL)’s Paris III (the International conference to support Lebanon held in January 25, 2007) program commits it to a comprehensive and ambitious program of structural, social and fiscal reforms. Key to its success is placing the large public debt on a downward trajectory, while simultaneously protecting the poor, vulnerable and middle-class segments of the population from negative shocks, and ensuring that social indicators do not deteriorate. Indeed, improving social outcomes such as in the health sector is a priority of the Social Action Plan (SAP) presented in Paris. A Development Policy Loan (DPL) will help GOL reform its weak social protection system (social insurance and social assistance) to provide adequate protection not only for the difficult transition period ahead but also for the medium term, and to improve health and social outcomes at a time of fiscal constraints.] (This section is taken from the “Lebanon Emergency Social Protection Implementation Support Project” of the World Bank)
Lebanon is facing political and structural problems that are reflected in difficult economic and social challenges. Therefore, any reform agenda should start by adopting serious political and administrative reforms and it should not be limited to economic and social reforms. The rational of the Bank, stated in the paragraph above, is based on the economic and financial reform agenda proposed by the Lebanese government and the Economic and social impact assessment of the Israeli aggression in July 2006 (ESIA) conducted by the Bank. This agenda suggests the privatization and liberalization of various sectors, mainly the sectors of energy and communication in addition to implementing many other fiscal and tax policy measures. However, this agenda lacks serious national plans to support and to strengthen productive sectors such as national industry and agriculture. It is worth noting that the above mentioned reform agenda presented by the Lebanese government is mainly the product of the Bank advises and consultations during the last two years.
In previous evaluations of the health and education sectors in Lebanon, the World Bank concluded that the problem in these two sectors is mainly with the outcome; since the government spending is relatively high (4% for each sector) and the national expenditure for both sectors represents 23% of the GDP. However, the conclusion was that the limited role of the public administration in controlling these sectors is the main reason behind their inefficiency and bad outcome. In response to this deduction the Bank proposed to improve the role of the government in reforming these sectors in addition to regulating and organizing the role of the private sector in health and education, and not the opposite. Thus there is a need for a more efficient and flexible role of the public administration in these areas. This conclusion recalls the assumption that energy and communication sectors might need reforming the public administration instead of privatizing them, unless privatization is recommended to cover the budgetary deficit and the debt services. This in turn raises another dimension of the problem, which is related to reforming macroeconomic policies and addressing structural problems that Lebanon is facing prior to privatizing and liberalization of public services.
On the other hand, the World Bank envisions that the adopted agenda for financial and economic reform will have a negative social impact; therefore it proposes the implementation of social safety nets’ programs in order to alleviate these negative impacts. However, social safety nets are not enough; a social impact assessment is needed in order to modify these policies instead of dealing with their negative results. Moreover, the Bank has to encourage Lebanon to adopt comprehensive national strategies for economic and social development including political and administrative reforms rather than implementing selective programs targeting poor and vulnerable groups only. These national strategies should take into consideration the available national human, natural, and financial resources and capacities. They have to improve their performance and their optimal use. They should be based on the empowering and enhancing the capacities of the national institutions, and decentralized implementation plan that actively engages local authorities and civil society.
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