Lebanon

About UNDP/ About Lebanon

The Lebanese Republic is a small, mostly mountainous country in Western Asia, on the eastern shore of the Mediterranean Sea. A small country with a population of approximately four million, it was created when the French mandate expanded the borders of the former autonomous Ottoman Mount Lebanon district, forming in September 1926 the Lebanese Republic. Lebanon subsequently became an independent country in 1943.

A demographically and geographically highly diverse country, Lebanon follows a special political system known as confessionalism, distributing power as evenly as possible among its various religious sects, of which more than 18 are officially recognized. No accurate numbers on the distribution of the population per sect are available since the only census was conducted in 1932. It's officially languages are Arabic and French. Armenian and English are also widely spoken and understood.

The flag of Lebanon features a cedar in green against a white backdrop, bounded by two horizontal red stripes along the top and bottom. A combination of temperate climate, many historic landmarks and world Heritage sites continues to attract large numbers of tourists to Lebanon annually, despite of its political instability. In addition, Lebanon's reputed banking system and capitalist economy, largely unique to the region, have given it significant economic status among Arab countries. The thriving tourism and banking activities have naturally made the services sector the most important pillar of the Lebanese economy.

Lebanon's lack of raw materials for industry and its complete dependency on Arab countries for oil have made it difficult for the Lebanese to engage in significant industrial activity. As such, industry in Lebanon is mainly limited to small businesses concerned with reassembling and packaging imported parts.

Lebanon is ideally suited for agricultural activities in terms of water availability and soil fertility, as it possesses the highest proportion of cultivable land in the Arab world. Ironically though, Lebanon does not have a large agricultural sector.

There are approximately 16 million people of Lebanese descent spread all over the world, Brazil hosting the largest Lebanese community. However Argentina, Australia, Canada, Colombo, Mexico and Venezuela also have the large Lebanese communities.

Lebanon lacks a social development vision for the country. Whereas some progress has been made to understand and measure poverty, through partial surveys and social mappings, the country still lacks a national poverty line and poverty profile, as well as a poverty strategy and poverty reduction targets. Recently, the two national surveys that were conducted by the Ministry of Social Affairs and UNDP (1998 and 2006) for the years 1995 and 2004 and the Poverty, Growth and Income Distribution report have produced detailed information on national living conditions, including on the poor. The main economic challenge of the government is to address fiscal imbalances, as chronic fiscal deficit and debt continue to threaten macro-economic stability and undermine growth prospects. At the end of 2002, a series of measures to address the issue of the public debt were elaborated and presented to a donor's conference, Paris II. The financial inflows that resulted from the conference coupled with two schemes with the central bank and Lebanese commercial banks represented a package of over $10 billion that was mainly used to replace part of the high interest short-term debt with low interest long maturity debt. As a consequence, market sentiment improved, interest rates went down and the Lebanese economy started to recover in 2003 and 2004, with real GDP growth of 3 and 5 percent respectively.

However, despite these positive developments, the full implementation of the reform measures under Paris II, for example privatization and securitization, was undermined and obstructed because of internal political divisions exacerbated in an election year. As a result, policy outcomes fell short of the government's Paris II objectives. During the first half of 2005, the economy was hit by the adverse repercussions stemming from the assassination of the ex-Prime Minister Rafik Hariri and the events that followed. Moreover, the war by Israel against Lebanon in July 2006 was devastating to the economy. A very promising tourist season and strongly resurgent economic activity were interrupted, employment opportunities reduced and unemployment increased. The direct and indirect cost of the war has been officially estimated at $5 billion, or 22% of GDP. The expected 2006 GDP growth rate of 6% was directly compromised during the war, experiencing an 11-point decline to -5%. Around 850 commercial enterprises in the manufacturing and service sectors were destroyed. Public debt rose to the even less tenable level of 180% of GDP. The economic impact, however, in terms of reduced economic activity and employment opportunities, had a greater burden falling on the most vulnerable groups in society such as small scale entrepreneurs, women-headed households and the poor.

With regards to Lebanon's political stability, Michel Sleimane was elected President in mid-2008, who initiated a National Dialogue process with a view to reconciling the conflicting parties who had been involved in the clashes of May 2008. Five month after the parliamentary elections that were held on 7 June 2009, the new cabinet led by Prime minister Saad Hariri saw the light on 9 November 2009.