Lebanon's Finance Minister Links Sustainable Recovery to Halt in Hostilities

During his participation in the European Bank for Reconstruction and Development (EBRD) meeting held this year in Riga, Latvia's capital, Finance Minister Yassin Jaber highlighted that the ongoing regional conflict and war have intensified Lebanon’s economic and humanitarian crisis, causing extensive infrastructure damage, displacement of over one million people, and a decline in economic activity.

He reaffirmed Lebanon’s commitment to reform efforts and cooperation with the International Monetary Fund to rebuild trust and achieve recovery. Jaber urged the international community to strengthen its support for Lebanon, stressing that any sustainable economic recovery remains contingent upon the cessation of hostilities rather than fragile ceasefires that fail to provide lasting stability.

In his address, Minister Jaber stated:

"Lebanon currently stands on the front lines of the economic and humanitarian repercussions stemming from the ongoing regional conflict and hostilities. The country faces a critical juncture as it attempts to emerge from years of unprecedented crises amid a continuing war that has inflicted severe damage to infrastructure and significant losses to livelihoods.

The direct impacts on Lebanon’s economy are severe and include:

Widespread destruction of housing, infrastructure, and agricultural lands, with entire villages destroyed in some areas;

The displacement of more than one million people, with diminishing prospects for safe return due to the ongoing conflict;

Major disruptions to trade and tourism, alongside inflationary pressures and declines in remittances and investments;

Increased costs of fuel and imports, supply chain interruptions, and mounting pressures on public finances and institutions already suffering from fragility.

The indirect effects are equally serious and may have longer-lasting consequences. Continued instability heightens uncertainty, undermines private sector confidence, delays financial sector recovery and necessary reforms, and exacerbates economic and fiscal vulnerabilities.

Furthermore, declines in tourism revenues and foreign remittances, historically key buffers against economic shocks, intensify pressures on foreign currency liquidity and the balance of payments. While some recovery indicators had begun to emerge, with economic growth projected at 3.5% in 2025, current estimates suggest a possible contraction of 7% to 10% if the regional conflict continues to negatively affect confidence and economic activity.

At the same time, the conflict increases the social and economic costs of delayed reforms, while humanitarian needs—including food security, healthcare, and shelter—continue to expand.

I would like to share a personal reflection.

I would have preferred to stand before you today to discuss Lebanon’s progress on reforms, efforts to restore trust and build institutions, and our aspirations to open a new chapter of stability and prosperity.

However, I stand before you as Lebanon endures one of the most devastating periods in its recent history. Entire villages have been reduced to rubble, communities uprooted from lands tied to them for generations, homes, schools, and essential infrastructure destroyed, and heritage and cultural sites severely damaged or completely lost. Economic activity has also been significantly harmed.

Beyond material losses, there is an immeasurable human cost: loss of lives, livelihoods, security, and hope.

Despite these immense challenges, the resilience of the Lebanese people remains steadfast. Our commitment to reform, recovery, and reconstruction is unwavering. Our priorities remain clear: maintaining macroeconomic stability, preserving public institutions’ capacities, responding to urgent humanitarian needs, and preparing for recovery, reform, and rebuilding.

Within this framework, we continue steady progress toward an IMF-supported program as a fundamental pillar to establish a credible reform framework post-crisis, mobilize international support, and lay the foundations for sustainable and inclusive growth.

The government is also advancing long-awaited reforms, including restructuring the banking sector and restoring deposits, which contribute to rebuilding confidence in the financial system—a crucial element for attracting investment and reviving private sector-led growth.

Regarding the role the EBRD can play in supporting conflict-affected economies, I would like to emphasize several points:

First, resilience and rapid response are essential. Countries facing overlapping crises require flexible and swift financing tools that enable governments to redirect resources toward emergency response and ensure continuity of essential services and public institutions.

Second, support should focus not only on reconstruction but also on strengthening resilience. Investment in infrastructure, energy, digital transformation, and institutional capacity building forms a necessary foundation to withstand prolonged shocks and prepare for recovery.

Third, the EBRD’s competitive advantage in supporting the private sector is particularly important at this stage. Restoring investor confidence, supporting small and medium enterprises, facilitating trade finance, mobilizing private capital, and revitalizing financial intermediation are all key factors for recovery and job creation.

In this context, the Lebanese government expresses its deep appreciation for the EBRD’s support to Lebanon and its private sector. We also welcome the bank’s renewed commitment to Lebanon and the Eastern Mediterranean region through the Middle East Conflict Response (MECR) program, aimed at addressing war repercussions and accelerating planned investments in the area.

We are particularly encouraged by the resumption of the bank’s investment operations targeting the Lebanese private sector, including the granting of the first loan to a Lebanese company since 2019. This represents an important signal of confidence in the Lebanese economy at a time when investment and economic activity need to be revitalized.

The EBRD works closely with the Lebanese government and private sector to mitigate conflict impacts and support recovery efforts. To expand its support to Lebanon, strong backing from donors remains essential.

In this regard, I thank the European Union for extending the guarantee program that enabled recent financing operations conducted by the bank in Lebanon. I also encourage continued bilateral support for the bank’s conflict response initiatives. I extend my gratitude to the bank’s management and teams for their ongoing commitment to Lebanon and the region.

Fourth, stronger partnerships and regional integration should form a key part of the recovery strategy. Conflict-affected countries cannot recover in isolation from their surroundings; enhancing connectivity, trade, and regional investment can serve as important drivers of growth and stability."

Jaber concluded: "Finally, and most importantly, no economic recovery can be sustainable without stability. Lebanon first and foremost needs a halt to hostilities, not fragile ceasefires that fail to provide the required lasting stability. With coordinated international support from our traditional partners, Lebanon can transition from crisis management to recovery, reform, and achieving inclusive and sustainable growth."

Minister Jaber also held a series of meetings with officials from international institutions capable of assisting Lebanon, aiming to explore ways to secure support in reconstruction efforts.