Ishac Diwan

The current government in Lebanon is keen to encourage financial recovery and find a new path to economic growth. A thorough understanding of the causes behind the country’s recession and the factors constraining a recovery are necessary to shape policy priorities. These are also important as an input into the discussions of the 2026 budget and to the ongoing negotiations with the International Monetary Fund (IMF). Using the wrong framework for these decisions could yield low economic growth, which would be harmful for a quick and decisive economic recovery. Conversely, improved economic outcomes and broad buy-in, following public consultations, will ease the implementation of politically difficult reforms. Thus, policymakers must take great care to develop a narrative about how to achieve progress in the short and medium terms that is adjusted to local circumstances.

Lebanon needs a new aid strategy to preserve the country’s ability to one day recover. What is required is a donor strategy that walks on two legs: a first leg that offers a big reconstruction push conditioned on economic and institutional reforms and, in parallel, a second leg that provides urgent support to the Lebanese population.

Not unlike during the lost decade of the 1980s, all Arab states are, to various degrees, in some form of deep crisis: weakened by fiscal deficits, losing their capacity to deliver services, unable to tax fragile economies, and facing the threat of social unrest. COVID-19 has revealed most of these weaknesses further.

The Middle East and North Africa (MENA), for a variety of reasons, are unrivaled in their need for bold, creative thinking about their future. But that is precisely why creative thinking about the future of the region — why strategic foresight — is essential. Produced in conjunction with MEI’s Strategic Foresight Initiative, Thinking MENA Futures aims to map out some of the possible futures for the region, as envisioned by thoughtful innovators working today to realize them.

For the past 18 months, Lebanon has been reeling from a wrenching economic crisis. This essay deciphers the crisis’s origin, describes the current juncture, and reflects on the likely outcomes in the proximate future.