First social spending review
unveiled at Institute of Finance

Yassine Jaber: “inadequate and misaligned with needs”

The country’s first comprehensive review of government spending on social protection was launched at the Institute of Finance – Basil Fuleihan (IoF-BF). The report covers the period from 2017 to 2024. It calls for bold reforms, greater fiscal space, and a renewed commitment to safeguarding vulnerable communities.

The report was developed in partnership with the International Labour Organization (ILO), UNICEF, and funded by the European Union. It highlights a sharp decline in real social protection spending and identifies key inefficiencies in how resources are allocated.

The Minister of Finance Yassine Jaber said that the government’s top priorities are: “Protecting and expanding social safety nets, particularly for the most vulnerable and those affected by conflicts, and reforming civil service and the pension system.” He said that the Cabinet adopted a national social protection strategy in February 2024, laying out five pillars: Targeted cash assistance, expanding social insurance, improving care services, boosting employment for marginalized groups, and ensuring access to health and education for all – while at the same time acknowledging that ambitions clash with a harsh financial reality: “Spending availability is extremely limited. Most discretionary expenditures are now consumed by urgent needs,” he said. Only four percent of the 2024 budget is allocated to social protection, an amount he called “inadequate and misaligned with people’s needs.”

Social Affairs Minister Haneen Sayed echoed the same concerns. “The allocation of social spending remains unfair and disconnected from actual needs,” she said. Her ministry is proposing to raise the share of social assistance in its budget from four percent to 30 percent.

The report revealed that nominal allocations for social protection (excluding health) in the real dollar value plummeted from $4.6 billion to around $600 million, due to currency collapse and inflation. When including health-related protection, 2024 spending is estimated at $1.3 billion, compared to $6.1 billion in 2017.

The report recommends five major actions: improving data quality, boosting institutional capacity, increasing fiscal space, accelerating structural reforms (including pension overhaul), and implementing a public communication and change management strategy.

Lamia Moubayed Bissat, Director of the IoF-BF, said that financing social protection is as much a political challenge as a financial one. “We must reform the tax system to be more progressive and fair,” she said, adding that guaranteed long-term funding is critical. “Reforming social protection is a long-term investment, and progress will be gradual and politically contentious. It is essential to create fiscal space and build political consensus to determine the annual share of resources allocated to social protection,” she said. She said that indirect taxes may seem more appealing to the government and easier to implement, but warned of numerous loopholes in the current system that require bold decisions and dialogue, such as introducing a dedicated tax for social protection or eliminating certain unfair exemptions and preferential treatments. She said that reforming public sector pensions is both a financial and social necessity, and must be grounded in three core principles: fiscal sustainability, fairness and equity, and evidence-based policy making. “We can begin with standard short-term adjustments,” she said, “while also considering more structural, long-term reforms. These standard measures could include linking pensions to inflation or revenues, with automatic safeguards in the event of a recession or economic contraction.”