Poverty, Growth and Income Distribution in Lebanon

Abstract

This Country Study is based on a full national report that is the first to draw a profile of poverty in Lebanon based on money-metric poverty measurements of household expenditures. The report provides a comprehensive overview of the characteristics of the poor and estimates the extent of poverty and the degree of inequality in the country. It finds that nearly 28 per cent of the Lebanese population can be considered poor and eight per cent can be considered extremely poor. However, the most important finding of the report is that regional disparities are striking. For example, whereas poverty rates are insignificant in the capitol, Beirut, they are very high in the Northern city of Akkar. In general, the North governorate has been lagging behind the rest of the country and thus its poverty rate has become high. Levels of poverty are above-average in the South but are not as severe as expected. There are three other major results that have notable implications for a poverty-reduction programme in Lebanon. First, with few exceptions, measures of human deprivation, such as that provided by an Unsatisfied Basic Needs methodology, are generally commensurate with those for money-metric measures based on household expenditures. Second, the projected cost of halving extreme poverty is very modest, namely, a mere fraction of the cost of the country’s large external debt obligations. However, such a cost would rise dramatically if inequality were to worsen (i.e., if future growth were anti-poor). Also, the cost of reducing overall poverty would be substantially higher. Third, the poor are heavily concentrated among the unemployed and among unskilled workers, with the latter concentrated in sectors such as agriculture and construction. This places a priority on a broad-based, inclusive pattern of economic growth that could stimulate employment in such sectors. Based on such findings, the report concentrates on providing general policy recommendations on issues of directing public expenditures to poor households. One of its major recommendations is to concentrate on channelling resources to poor regions below the governorate level, such as to four ‘strata’ where two-thirds of the poor in Lebanon are concentrated. However, the report notes that macroeconomic policies, particularly fiscal policies, will have to be redesigned to mobilize the reources necessary to finance the increases in public expenditures on the social safety nets and public investment in social services that should be part of a major poverty-reduction programme.