Search
Search

World bank loan

Slow state compliance with conditions for a $246 million loan could delay aid by months, the World Bank says

Slow state compliance with conditions for a $246 million loan could delay aid by months, the World Bank says

Discussions between Lebanon and World Bank officials regarding how the assistance will be paid out are ongoing, although it was originally agreed that the aid dollars would stay with the central bank while recipients would get the support in lira at a rate of LL6,240. (Credit: Anwar Amro/AFP)

BEIRUT — Lebanon has not yet complied with the required conditions to activate a $246 million loan intended to help the country set up a social safety net for its poorest families, and aid distribution is likely to be delayed by months, the World Bank said in a status report on the program’s implementation made public Tuesday.

The World Bank’s board of directors approved the program, the centerpiece of which was a $204 million initiative to provide 147,000 of Lebanon’s poorest households with monthly cash assistance via prepaid cards, more than three months ago, on Jan. 12.

Parliament followed suit on March 12, although with some changes to the original agreement, including cutting some $21 million in administrative expenses to increase the number of recipient households to more than 161,000.

However, the World Bank has yet to sign off on the alterations. The status report noted that the bank is still awaiting a “letter from the Minister of Finance to review the Parliament’s changes, which will likely require a restructuring and additional grant financing will be needed.”

Lebanon also has not yet submitted other documentation required for the program to take effect, including a legal opinion justifying the caretaker government’s authority to enter into the agreement in the first place, the report noted.

The deadline for Lebanon to meet the conditions is 120 days after the World Bank board’s approval, which is in less than one month.

“None of the effectiveness conditions have been met to date and the World Bank is working closely with the government to ensure speedy compliance with these conditions in order to proceed with project implementation,” the report noted.

A Finance Ministry spokesperson was unable to immediately comment on when the government would meet the conditions. World Bank regional director Saroj Kumar Jha told L’Orient Today that the Bank could grant an extension of the deadline “on an exception basis, provided there is progress towards meeting the effectiveness conditions.”

He noted that as the project is “an emergency program to provide [a] much needed safety net to the extremely poor households … we would make every possible effort to help proper implementation of the program with strict adherence to [the World Bank’s] fiduciary, safeguards, transparency and independent oversight requirements.”

Apart from the documentation requirements, the status report noted that the government had not begun the process of verifying the eligibility of prospective aid recipients, a process expected to take four to six months and which “should have started several months ago to not delay implementation.”

Assem Abi Ali, the Social Affairs Ministry official representing the ministry in negotiations with the World Bank, told L’Orient Today that the verification had, in fact, started but “the pace of it is very slow,” in part, he said, because Parliament had not approved contracts with private companies to help Social Affairs Ministry social workers visit the families and ensure they meet the eligibility criteria.

Some 45,000 households have been verified, Abi Ali said, and he estimated that verifying the rest would take about four months. However, he said that families who are found eligible could start receiving the aid without having to wait for all the other verifications to be completed.

Meanwhile, discussions between Lebanon and World Bank officials regarding how the assistance will be paid out are still ongoing. As originally agreed, the aid dollars would stay with Banque du Liban, helping it to shore up its dwindling foreign reserves, while recipients would get the support in lira at a rate of LL6,240, which while higher than the “bank rate” of LL3,900 is considerably lower than the market exchange rate — presently about LL12,000.

The World Bank and other international donors have since been pushing for the aid — not only in this program but in all internationally funded assistance programs, including for refugees — to be paid out in dollars or at the market rate.

Jha told L’Orient Today that the Bank has asked for the beneficiaries to be paid out in dollars and that “this is our condition for implementing the program,” but when asked whether this means the program would not be implemented in the event the Lebanese government does not agree, he said he would not “speculate about the future.”


BEIRUT — Lebanon has not yet complied with the required conditions to activate a $246 million loan intended to help the country set up a social safety net for its poorest families, and aid distribution is likely to be delayed by months, the World Bank said in a status report on the program’s implementation made public Tuesday. The World Bank’s board of directors approved the program, the...