Lebanon + 1 more

Impact of humanitarian aid on the Lebanese economy

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PREFACE

Since the outbreak of the Syrian crisis in March 2011, more than three million people have fled from the suffering brought by the war, seeking refuge in neighboring countries. More than 1.2 million Syrians have come to Lebanon and registered with UNHCR. In response, the United Nations, in partnership with the Lebanese government and with the generous support of the international community, have established one of the largest and most complex crisis operations in the world, combining humanitarian assistance to the refugees with progressively increasing support to the Lebanese host communities. The Lebanese people, however, were the true first responders to the crisis, showing remarkable solidarity by providing welcome, shelter, services and support, even though in many cases their own needs were already high.

While the literature on the impact of the humanitarian aid to the Syrian refugees is extensive, given the wide array of assessment tools and reports available, much less attention has been given so far to the effects on the Lebanese economy. This is especially important considering the large volume of foreign aid that has been directed to Lebanon in response to the Syrian crisis (roughly US$ 2.2 billion since 2012); but also in light of the specific characteristics of the Lebanon response operation, which – unlike other humanitarian operations – is largely channeled through public institutions and makes extensive use of local human resources and national goods and services.

To provide a deeper understanding of the overall effects of the response operation, UNDP and UNHCR have commissioned a study to assess the impact on the Lebanese economy of the assistance provided by four major UN agencies (UNHCR, UNICEF, WFP, and UNDP) in response to the Syrian crisis. It was agreed to adopt two measures to reflect the direct and indirect impacts of the humanitarian funds: (1) A fiscal multiplier exercise which calculates the total effect of humanitarian expenditures on the aggregate demand and GDP of the pre-crisis Lebanese economy, disregarding all other economic and fiscal factors; and (2) A general equilibrium exercise which incorporates the various sources of production and consumption and the potential substitution among the various factors of production.

The present report presents the results of the first phase of the study, i.e. the multiplier exercise, which calculates the impact of an estimated annual aid package for four major UN humanitarian agencies of US$ 800 million. The second and final part of the study,which analyzes the impact of the Syrian crisis on the demand and supply of labor and capital within the Lebanese economy, will be presented at a later stage.