Lebanese Dread End to Subsidies

Maya Ibrahimshah, the founder of Lebanese NGO Beit al-Braka (house of blessings) organizes food to be distributed to the needy. AFP
Maya Ibrahimshah, the founder of Lebanese NGO Beit al-Braka (house of blessings) organizes food to be distributed to the needy. AFP
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Lebanese Dread End to Subsidies

Maya Ibrahimshah, the founder of Lebanese NGO Beit al-Braka (house of blessings) organizes food to be distributed to the needy. AFP
Maya Ibrahimshah, the founder of Lebanese NGO Beit al-Braka (house of blessings) organizes food to be distributed to the needy. AFP

To feed her family, Lebanese mother Sandra al-Tawil sold her fridge and washing machine. Now she fears the cash-strapped state will scrap food subsidies, plunging them deeper into poverty.

Lebanon is locked in its worst economic crisis since the 1975-1990 civil war, with no end in sight.

The value of the Lebanese pound has plunged, driving up the price of crucial imports like food and fuel and triggering small but angry protests.

More than half of Lebanon's population is poverty stricken and relies on subsidies, but a central bank demand for "an immediate plan to ration subsidies" is looming.

"We're already tightening our belts. What will we eat if we can no longer buy rice or lentils?" 40-year-old Tawil said.

Tawil and her husband lived a comfortable life in Dubai before returning to their homeland to open a high-end hair salon in 2019.

But that dream turned to nightmare after the financial crisis and the Covid-19 pandemic hit.

"I had to sell my washing machine and fridge... just to get the minimum of daily bread and pay rent," said the mother of two young children.

Her husband found a job at the start of the year, and the Beit El Baraka charity is helping them out with food and school fees.

But Tawil is still worried, and furious with the political class she blames for the malaise.

"If I see people heading out to protest, I'll be the first to join them," AFP quoted her as saying.

In a country that imports 80 percent of its food, much of the six million population depends on subsidies to get by.

Even without them being lifted, many are already struggling, said Beit El Baraka founder Maya Ibrahimchah.

"There have been many more demands for help over the past four months," she said.

"Those we are helping today are all from the middle class."

The state has poured up to $437 million into subsidies a month, the World Bank estimates, to keep prices in check for bread, medicine, fuel and electricity, as well as around 300 other items since mid-2020.

To counter the pound's drastic devaluation, importers get access to dollars at a preferential rate to ensure they can afford to continue bringing in supplies.

For flour, fuel and medicine, for example, they offer dollars at the official exchange rate of 1,507 pounds to cover most of their cost.

But traders must resort to the black market to cover the difference, where Tuesday the rate hit a record low of 10,000 pounds to the dollar.

As a result, in less than a year the price of a large bag of subsidized bread has risen from 1,500 to 2,500 pounds.

Authorities have remained vague about how the subsidies will be reduced, though meetings are ongoing.

In early December, central bank governor Riad Salameh said it could only fund subsidies for another two months. Later that month, he said two billion dollars were available for them.

At the end of February, the central bank's website showed it had $17.9 billion in foreign currency reserves, yet $17.5 billion of that is the bank's required reserves.

The bank did not respond to AFP's repeated requests for comment.

The UN food agency has warned any subsidy reduction would have "major inflationary repercussions" and "put an unbearable strain on households".

The price of bread could increase by up to three times and fuel by 4.5 times, the World Food Program said, adding it was critical to immediately scale up assistance to the poorest.

Under the government's latest plan, subsidies could be gradually lifted, with financial aid to soften the blow over several years.

The state would first lift subsidies for bread, fuel and around 300 other items, under the plan seen by AFP, before later on reviewing spending in the electricity sector.

To compensate, up to 80 percent of the population would receive handouts -- 50 dollars a month for adults aged over 23 and half for anybody younger.

Those amounts, and the numbers of beneficiaries, would then progressively diminish.

Until then, the authorities have secured $246 million from the World Bank to help 786,000 Lebanese.

But Nasser Jomaa, 52, said he doubted the government would really provide any financial support.

"It's just empty words. We have zero faith in the state," said the driver, who lives with his unemployed 25-year-old son.

As the Lebanese pound has plunged on the black market, he has seen his monthly income drop in value from $1,000 to just $160.

He added that any lifting of subsidies would be "catastrophic".

Already, he said, "we no longer eat meat."



Half of Yemen’s Population Face Mounting Risks from Climate Change

Al-Garehi Al-Gharbi camp in the Abs district of north-west Yemen. (Norwegian Refugee Council)
Al-Garehi Al-Gharbi camp in the Abs district of north-west Yemen. (Norwegian Refugee Council)
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Half of Yemen’s Population Face Mounting Risks from Climate Change

Al-Garehi Al-Gharbi camp in the Abs district of north-west Yemen. (Norwegian Refugee Council)
Al-Garehi Al-Gharbi camp in the Abs district of north-west Yemen. (Norwegian Refugee Council)

Already suffering from a prolonged conflict as a result of the Houthi coup against the legitimate authority, Yemen is facing mounting risks brought on by climate change, the World Bank warned on Thursday.
Many populations are facing threats from climate change, such as extreme heat, drought, and floods, the WB said in its newly released Yemen Country Climate and Development Report (CCDR).
Stephane Guimbert, World Bank Country Director for Egypt, Yemen and Djibouti said that Yemen is facing an unprecedented convergence of crises — conflict, climate change, and poverty.
He called for immediate and decisive action on climate resilience, a matter of survival for millions of Yemenis.
“By investing in water security, climate-smart agriculture, and renewable energy, Yemen can safeguard human capital, build resilience and lay the foundations for a path to sustainable recovery,” he said.
The WB report said half of Yemenis are already exposed to at least one climate hazard — extreme heat, drought, or flooding — with compounding effects on food insecurity and poverty.
These risks, it showed, are expected to intensify without immediate action and Yemen’s annual GDP could decline by an average of 3.9% by 2040 under pessimistic climate scenarios, largely due to decreased agricultural productivity and infrastructure damage.
Navigating Challenges
Despite these challenges, the CCDR identifies strategic opportunities to strengthen resilience, improve food and water security, and unlock sustainable growth, the WB report noted.
For example, it said, targeted investments in water storage and groundwater management, coupled with adaptive agriculture techniques could lead to productivity gains of up to 13.5% in crop production under optimistic climate scenarios for the period of 2041 to 2050.
The report also spoke about risks to the fisheries sector, considered as a critical source of livelihood for many Yemenis.
Its projections indicate a potential decline of up to 23% in fish stocks due to rising sea temperatures and altered marine ecosystems.

The WB report also said that climate change exacerbates existing health challenges in Yemen, leading to increased healthcare costs and strain on already fragile health systems.
“It is projected that climate-related health issues could cost the country over $5 billion in excess health costs by 2050,” it noted.
“Addressing these challenges requires integrating climate resilience into public health planning, with a focus on vulnerable groups such as women and children.”
Concerning infrastructure, the report said urban areas and critical infrastructure are especially vulnerable, and without adaptation measures, economic shocks will disproportionately affect already fragile communities.
As for the private sector, it has a critical role to play in addressing Yemen’s pressing development challenges, said Khawaja Aftab Ahmed, IFC’s Regional Director for the Middle East.
“Harnessing its potential through innovative financing mechanisms and guarantee instruments and creating a conducive investment climate can help mobilize the climate-focused funding the country urgently needs to build a greener and more resilient future,” he said.
The WB report also said that Yemen also has immense potential for renewable energy, which could serve as a key component of its climate response and recovery.
It showed that harnessing renewable energy resources not only offers a pathway to reduce reliance on fossil fuels but also enables the creation of a more resilient power infrastructure.
“This will be essential in supporting vital services such as healthcare, water supply, and food distribution, particularly in conflict-affected areas,” it said.
Global Coordination
The World Bank highlighted the significant commitments and coordination from the international community to support Yemen in coping with climate shocks and building broader resilience.
It said securing sustainable peace will be required to unlock the financing and take the action needed to build long-term resilience to climate change.
The CCDR then underscored the importance of flexible, risk-informed decision-making to adapt climate actions to Yemen's uncertain political landscape.
Under a “Peace and Prosperity” scenario, it said, a higher level of adaptation can be implemented, yielding greater economic and social benefits.
Yemeni Minister of Water and Environment, Tawfiq Al-Sharjabi, stressed the importance of integrating climate action into development strategies and adapting to climate fluctuations.
The minister was speaking at a special session to discuss the WB report on the sidelines of the 29th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP29) held in Baku, Azerbaijan.
He said the report represents a significant contribution for Yemen in addressing climate change and will facilitate access to various climate financing options amid the structural and technical fragility faced by institutions due to the war.
The report, Al-Sharjabi added, aligns closely with Yemen's urgent priorities, particularly in the areas of water and food security, enhancing livelihoods, and promoting area-based climate adaptation approaches.