Lebanon Businessnews News

Cash economy at $10 billion
as per World Bank estimation
“Only a few winners and a majority of losers,” says report
Share     Share on Facebook     Share on LinkedIn    
The cash economy has been estimated by the World Bank at $9.9 billion or 45.7 percent of GDP in 2022.

The ‘Normalization of Crisis is No Road to Stabilization’ report released yesterday by the World Bank, said: “The cash economy is far from [being] a net contributor to growth. On the contrary, it threatens to compromise the effectiveness of fiscal and monetary policy, heightens the risk of money laundering, increases informality, and prompts further tax evasion.” The report said that the increasing reliance on cash transactions also threatens to completely reverse the progress that Lebanon had made before the crisis to enhance its financial integrity by instituting robust anti-money laundering mechanisms in its commercial banking sector.

“As long as the economy is contracting and crisis conditions persist, living standards are set for further erosion, poverty will continue to spiral,” said Jean-Christophe Carret, the World Bank Country Director for the Middle East Department. “Delays in the implementation of a comprehensive reform and recovery plan will only further compound human and social capital losses and render the recovery longer and more costly,” he said.

The report said that “despite the emergence of signs of normalization with the crisis, the economy is still in a state of sharp decline, and it is far from the path of stability, let alone the path of recovery.” It said that policymaking as it stands is still characterized by fragmented and inadequate crisis management decisions, undermining any comprehensive and equitable plan, draining capital in all its aspects, especially human and social, and paving the way for deepening social inequality. “There are only a few winners and a majority of losers,” it said.

The report also provides an overview of the latest economic developments, and assesses economic prospects and risks in light of the continuing uncertainty and political stalemate. It expects private consumption to continue to increase, albeit at low rates, and the current account deficit to decline. It said that the slowdown in the contraction of economic activity does not mean achieving stability.

Read the report
Normalization of Crisis is No Road for Stabilization
Date Posted: May 17, 2023
Share     Share on Facebook     Share on LinkedIn