Lebanese soldiers walk past a partially destroyed building in Beirut. The World Bank says Lebanon needs up to $760 million until December 2020, and $1.46 billion in 2021 to address its most pressing needs after the explosion. AFP
Lebanese soldiers walk past a partially destroyed building in Beirut. The World Bank says Lebanon needs up to $760 million until December 2020, and $1.46 billion in 2021 to address its most pressing needs after the explosion. AFP
Lebanese soldiers walk past a partially destroyed building in Beirut. The World Bank says Lebanon needs up to $760 million until December 2020, and $1.46 billion in 2021 to address its most pressing needs after the explosion. AFP
Lebanese soldiers walk past a partially destroyed building in Beirut. The World Bank says Lebanon needs up to $760 million until December 2020, and $1.46 billion in 2021 to address its most pressing n

Economy

Lebanon must implement 'credible' reforms after $4.6bn explosion toll, World Bank says

Losses including changes in economic flows are estimated to be between $2.9bn and $3.5bn

Sarmad Khan
Sarmad Khan
Abu Dhabi

August 31, 2020

  • English
  • Arabic

The devastating explosion that rocked the Lebanese capital this month caused up to $4.6 billion (Dh16.88bn) in damage to infrastructure and physical assets in Beirut, the World Bank said.

Losses including changes in economic flows on the back of a decline in output in several economic sectors are estimated to be in the range of $2.9bn to $3.5bn, the World Bank said in its Rapid Damage and Needs Assessment (RDNA) report released on Monday.

Public sector reconstruction and recovery needs for this year and 2021 are in the range of US$1.8bn and $2.2bn, according to the report, which was conducted in cooperation with the United Nations and the European Union. Lebanese ministries, civil society organisations and other key stakeholders also contributed to the report, which the World Bank said, will help guide the urgently needed global response.

In the immediate term, Lebanon needs up to $760 million until December 2020, and between $1.18bn and $1.46bn in 2021 to address its most pressing needs in the aftermath of the explosion.

The most severely affected sectors of the economy are housing, transport and tangible and intangible cultural assets – religious and archaeological sites, national monuments, theatres, archives, libraries and monuments, according to the report's findings. The transport sector’s needs are the highest, followed by culture and housing.

“Although its estimates are preliminary due to the rapid nature of the assessment that was carried out … under challenging circumstances, the RDNA lays the groundwork for an agenda for reform, recovery, and reconstruction,” the World Bank said.

“The three main economic effects of the explosion are: losses in economic activity caused by the destruction of physical capital; trade disruptions; and losses in fiscal revenues for the government.”

In terms of critical recovery, the World Bank said, Lebanon needs up to $40m in the next three months alone for an immediate “large-scale cash transfer to meet the basic needs of 90,000 affected individuals, and to create short-term jobs for 15,000 individuals”.

Immediate housing needs are estimated at up to $35m, while up to $275m in financial support is needed to restore services of 5,200 micro businesses and 4,800 small companies that employ thousands of Lebanese.

The World Bank estimates are in line with consultancy Strategy&'s $5bn damage assessment to infrastructure and physical assets. The departing Lebanese government has previously estimated the impact of the explosion, which left 300,000 people homeless, to be as high as $15bn.

The caretaker government estimates 190 people have been killed and more than 6,500 injured by the Beirut port explosion, while 50,000 houses, nine major hospitals and 178 schools sustained damage.

Lebanon is facing its worst economic crisis since its independence in 1943 and the Beirut port explosion has compounded its economic woes. Pre-explosion projections of 2020 real gross domestic product contraction were well into the double digits, driven by months of political and financial crisis that led to mass protests.

A helicopter puts out a fire at the scene of the explosion at the port of Lebanon's capital Beirut on August 4, 2020. AFP
A helicopter puts out a fire at the scene of the explosion at the port of Lebanon's capital Beirut on August 4, 2020. AFP
Smoke billows from an area of a large explosion that rocked the harbour area of Beirut, Lebanon. EPA
Smoke billows from an area of a large explosion that rocked the harbour area of Beirut, Lebanon. EPA
The aftermath of blast in Beirut. Sunniva Rose / The National
The aftermath of blast in Beirut. Sunniva Rose / The National
The scene of the explosion that rocked Beirut. AFP
The scene of the explosion that rocked Beirut. AFP
The harbour area with smoke billowing from an area of the explosion, Beirut, Lebanon. EPA
The harbour area with smoke billowing from an area of the explosion, Beirut, Lebanon. EPA
A man reacts at the scene of an explosion at the port in Lebanon's capital Beirut. AFP
A man reacts at the scene of an explosion at the port in Lebanon's capital Beirut. AFP
The scene of the explosion at the port in Beirut. AFP
The scene of the explosion at the port in Beirut. AFP
The scene of the explosion at the port in Beirut. AFP
The scene of the explosion at the port in Beirut. AFP
The scene of the explosion in Beirut. AFP
The scene of the explosion in Beirut. AFP
People gather near the scene of the explosion in Beirut. AFP
People gather near the scene of the explosion in Beirut. AFP
The scene of the blast in Beirut. AFP
The scene of the blast in Beirut. AFP
The scene of the explosion in Beirut. AFP
The scene of the explosion in Beirut. AFP
A wounded man is checked by a fireman near the scene of the explosion in Beirut. AFP
A wounded man is checked by a fireman near the scene of the explosion in Beirut. AFP
A resident stands in the street by a destroyed car, following the explosion near by at the port of Beirut. Bloomberg
A resident stands in the street by a destroyed car, following the explosion near by at the port of Beirut. Bloomberg
Lebanese Red Cross officers carry an injured woman following an explosion at the port of Beirut on August 4, 2020. AFP
Lebanese Red Cross officers carry an injured woman following an explosion at the port of Beirut on August 4, 2020. AFP
Smoke rises after the explosion was heard in Beirut. Reuters
Smoke rises after the explosion was heard in Beirut. Reuters
Firefighters spray water at a blaze after the explosion in Beirut. Reuters
Firefighters spray water at a blaze after the explosion in Beirut. Reuters
People walk at scene of the explosion in Beirut. AFP
People walk at scene of the explosion in Beirut. AFP
The blast at Beirut port. Twitter/ @borzou
The blast at Beirut port. Twitter/ @borzou
Army personnel around entrance to port.
Army personnel around entrance to port.
The aftermath of the blast in Beirut. Sunniva Rose / The National
The aftermath of the blast in Beirut. Sunniva Rose / The National
The aftermath of the blast in Beirut. Sunniva Rose / The National
The aftermath of the blast in Beirut. Sunniva Rose / The National
The aftermath of the blast in Beirut. Sunniva Rose / The National
The aftermath of the blast in Beirut. Sunniva Rose / The National
The aftermath of blast in Beirut. Sunniva Rose / The National
The aftermath of blast in Beirut. Sunniva Rose / The National
Sailors leave their damaged ship near the explosion in Beirut. AP Photo
Sailors leave their damaged ship near the explosion in Beirut. AP Photo
A vehicle stands damaged on a road following a large explosion at the port area of Beirut. Bloomberg
A vehicle stands damaged on a road following a large explosion at the port area of Beirut. Bloomberg
Firefighters try to extinguish flames after a large explosion rocked the harbour area of Beirut. EPA
Firefighters try to extinguish flames after a large explosion rocked the harbour area of Beirut. EPA
People and journalists gather at the scene of an explosion at the port of Lebanon's capital Beirut. AFP
People and journalists gather at the scene of an explosion at the port of Lebanon's capital Beirut. AFP
An injured man sits outside American University of Beirut medical centre on August 5, 2020. Reuters
An injured man sits outside American University of Beirut medical centre on August 5, 2020. Reuters
Men stand before wrecked buildings near the port. Getty Images
Men stand before wrecked buildings near the port. Getty Images
A man walks by an overturned car and destroyed buildings. Getty Images
A man walks by an overturned car and destroyed buildings. Getty Images
Lebanese soldiers stand outside American University of Beirut medical centre. Reuters
Lebanese soldiers stand outside American University of Beirut medical centre. Reuters
Injured people stand after the explosion. AP Photo
Injured people stand after the explosion. AP Photo
People gather by cars destroyed following an explosion at the port of Lebanon's capital Beirut. AFP
People gather by cars destroyed following an explosion at the port of Lebanon's capital Beirut. AFP
Wounded people wait to receive treatment outside a hospital following an explosion near the Beirut port. AFP
Wounded people wait to receive treatment outside a hospital following an explosion near the Beirut port. AFP

The Institute of International Finance estimates that Lebanon’s economy will shrink 24 per cent this year, compared with an earlier forecast of 15 per cent as a result of the blast.

Lebanon defaulted on eurobonds worth $31bn in March, which led its currency – pegged to the US dollar since 1997 – to lose more than 80 per cent of its value against the greenback in the black market. The inflation rate in Lebanon in July rose 112.4 per cent, compared with under 90 per cent in June, according to official data.

“Given Lebanon’s state of insolvency and lack of sufficient foreign exchange reserves, international aid and private investment will be essential for comprehensive recovery and reconstruction,” the World Bank said on Monday.

“Lebanon’s implementation of a credible reform agenda will be key to accessing international development assistance and to unlock external and private sector sources of financing.”

Killing of Qassem Suleimani
Mohammed bin Zayed Majlis
Teaching your child to save

Pre-school (three - five years)

You can’t yet talk about investing or borrowing, but introduce a “classic” money bank and start putting gifts and allowances away. When the child wants a specific toy, have them save for it and help them track their progress.

Early childhood (six - eight years)

Replace the money bank with three jars labelled ‘saving’, ‘spending’ and ‘sharing’. Have the child divide their allowance into the three jars each week and explain their choices in splitting their pocket money. A guide could be 25 per cent saving, 50 per cent spending, 25 per cent for charity and gift-giving.

Middle childhood (nine - 11 years)

Open a bank savings account and help your child establish a budget and set a savings goal. Introduce the notion of ‘paying yourself first’ by putting away savings as soon as your allowance is paid.

Young teens (12 - 14 years)

Change your child’s allowance from weekly to monthly and help them pinpoint long-range goals such as a trip, so they can start longer-term saving and find new ways to increase their saving.

Teenage (15 - 18 years)

Discuss mutual expectations about university costs and identify what they can help fund and set goals. Don’t pay for everything, so they can experience the pride of contributing.

Young adulthood (19 - 22 years)

Discuss post-graduation plans and future life goals, quantify expenses such as first apartment, work wardrobe, holidays and help them continue to save towards these goals.

* JP Morgan Private Bank 

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