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In January, after more than two years of political deadlock, Lebanon’s parliament elected army commander Joseph Aoun as president. Aoun has pledged to take control of all arms outside state authority —implicitly signaling the disarmament of Hezbollah— and fully implement the ceasefire deal with Israel. His presidency ended a prolonged vacuum that had left the country under a weakened caretaker government since October 2022. With this new leadership, questions have emerged about the economic priorities for the upcoming government.
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LIMS experts explained that the upcoming government faces the daunting task of steering the country out of its prolonged economic turmoil. While a large portion of economic adjustment has already taken place in recent years, policymakers must still address six key economic priorities:
- Preserve the balanced fiscal budget and a steady exchange rate achieved in 2024.
- Appoint independent regulatory bodies in electricity, telecommunications, and air transport to allow opening the markets to competition.
- Enforce the public procurement law on post-war reconstruction to ensure the good use of reconstruction funds.
- Unfreeze the banking system to restore confidence, provide finance, and support private sector growth.
- Empower municipalities to manage essential services—such as electricity, water, and waste management.
- Rebuild Lebanon’s economic ties with Gulf nations to unlock trade opportunities, attract foreign capital, and stimulate economic activity.
By committing to these priorities, the government can lay the foundations for a prosperous economy.
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Joseph Aoun’s Election Raises Confidence, but Currency Remains Steady
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The election of Joseph Aoun as Lebanon’s president has raised hopes and economic confidence. Market watchers had speculated that his appointment might trigger an appreciation of the Lebanese pound, yet the currency has remained largely stable, defying expectations.
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According to LIMS, the anticipated economic boost has materialized not through currency gains but rather through an increase in foreign exchange reserves. Since the summer of 2023, Lebanon’s central bank has taken crucial steps to stabilize the Lebanese lira by halting the printing of unbacked currency and ceasing financial support to the government and banks. These measures have provided a degree of monetary stability, despite the country’s ongoing economic and security challenges. However, this stability remains fragile, with Lebanon’s financial future hinging on sustained fiscal and monetary discipline.
The recent election of a new president has brought a glimmer of political progress. Yet, LIMS warns that any move to tap into central bank reserves to finance government spending could unravel the delicate equilibrium that has been maintained. Such a decision would likely reignite the financial imbalances that led to the country’s catastrophic 2019 collapse, when unrestrained monetary expansion and reckless fiscal policies triggered a severe economic crisis.
A key pillar of Lebanon’s current stability is ensuring that each Lebanese lira issued is fully backed by dollar reserves at a fixed exchange rate. LIMS has long championed the establishment of a currency board as the most effective safeguard against monetary mismanagement. A currency board would prevent authorities from printing money without sufficient reserves, effectively insulating Lebanon’s financial system from the political pressures that have historically undermined its stability.
The coming months will test whether Lebanon’s policymakers can resist short-term political pressures and adhere to the principles that have, at least for now, contributed to the economic adjustment.
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Lebanon’s Path to Electricity Reform: Can Privatization Solve the Crisis?
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Lebanon’s electricity crisis remains a significant drain on economic resources and a strain on the dignity of its people in 2025. Despite repeated promises of reform, energy ministers have failed to implement existing laws, choosing instead to maintain control over the government’s electricity company, Électricité du Liban (EDL). Going forward, any new minister must approach electricity as a sector to be reformed, not as a government monopoly to control.
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LIMS argued that at the heart of this transition lies the appointment of an Electricity Regulatory Authority (ERA), which aims to liberalize pricing and create a competitive energy market. The proposed reform hinges on unbundling EDL by enforcing the long-overdue 2002 electricity law, which mandates splitting the entity into three independent units for production, transmission, and distribution. Under the proposed framework, EDL would retain only the most efficient power plants, while the remaining non-functional facilities would be privatized or permanently decommissioned. Such a move would allow private firms to enter the electricity production market, fostering competition and efficiency and reducing production costs.
The proposed restructuring would also allow private electricity distribution companies to purchase power in the wholesale energy market rates and re-sell it to consumers in retail. Unlike the current service provides who get paid for their effort, private distributors would have a direct financial incentive to ensure bill collection, to cover their costs. Opening up the distribution market to competition will also introduce a dynamic pricing model that closely reflects actual production costs. Consumers would benefit from lower and more transparent tariffs, while private distributors would be compelled to offer competitive rates to retain customers. This model, successfully implemented in various other countries, has been shown to improve both efficiency and service delivery. Municipalities would also be able to grant licenses to private energy companies within their jurisdiction. Such decentralization of energy generation and distribution would help mitigate chronic shortages and accelerate deployment.
The proposed liberalization of Lebanon’s electricity sector presents a rare opportunity to address one of the country’s most persistent crises. Establishing a well-functioning ERA, ensuring transparent competition, and encouraging investment could lay the groundwork for a more reliable and financially sustainable electricity supply.
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Rebuilding Lebanon: A Strategy for Post-War Recovery
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Lebanon faces the task of post-war reconstruction while grappling with a protracted banking crisis and sovereign default. The World Bank estimates war-related damages at $8.5 billion, a sum far beyond the government’s means. Further complicating recovery efforts, Lebanon’s addition to the FATF Gray List has heightened scrutiny over Hezbollah’s financial activities and widespread public sector corruption—both of which threaten to deter crucial foreign aid and investment.
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LIMS argued that attracting international capital is imperative for Lebanon’s rebuilding efforts. Key sectors—including electricity, telecommunications, water services, and waste management—must be opened to competition, breaking the grip of inefficient state-owned enterprises. In war-affected regions, allowing private firms to invest in infrastructure would bypass chronic mismanagement and deliver reliable, cost-effective services. A stable electricity supply would revitalize industry, improved water systems would boost agriculture, and modernized telecommunications would attract investments in technology. Meanwhile, addressing waste management would not only improve public health but also enhance Lebanon’s appeal as a tourist destination.
Equally critical is ensuring checks on the use of reconstruction funds. Strengthening oversight on state expenditures and enforcing strict public procurement regulations are essential to restoring investor and donor confidence. Competitive bidding for reconstruction projects—anchored in the Public Procurement Law—would curtail political favoritism and prevent loopholes that enable corruption. Implementing these measures, as advocated by LIMS’ APPLE-C program, could serve as a catalyst for private sector participation in infrastructure development, paving the way for a sustainable and accountable recovery.
Lebanon’s post-war reconstruction cannot be built on the foundations of past failures. Structural reform, private sector engagement, and ironclad financial oversight are the only viable paths toward long-term economic stability and growth.
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Lebanon’s Banking Paralysis: An Exist Strategy
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Lebanon’s 2019 financial collapse triggered a banking crisis that has left depositors locked out of their savings and financial institutions in a state of paralysis. Nearly five years later, the sector remains frozen, compounding the country’s economic woes and eroding investor confidence.
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LIMS warns that continued inaction on banking reform is prolonging economic stagnation. The government must move beyond drawn-out debates over restructuring and prioritize on restoring financial intermediation. LIMS advocates for a dual-track approach: First, create the conditions allowing current banks to resume lending operations with “new dollars” (fresh funds entering the system). This measure would provide finance to a starving market and would allow jumpstart the economy. Banks would then use a portion of the resulting profits to repay “old dollars” (pre-crisis deposits). To prevent a repeat of past failures, banks should be barred from placing funds of lending money to the central bank. Simultaneously, new banks should be allowed to enter the market.
Second, the current fiscal discipline should continue. The government must generate budget surpluses to gradually repay its debts to the central bank, which in turn would allow the reimbursement of commercial bank deposits. This approach has already shown results—foreign exchange reserves have risen by more than $1.5 billion over the past 18 months. Those reserves should be deployed to reduce the central bank’s holding of government bond. This would improve the recovery rate for depositors and restore some trust in the financial sector. Without decisive action, Lebanon risks further entrenching its economic crisis, with a paralyzed banking system acting as a drag on recovery.
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Syria’s Currency Crisis: A Decade of Devaluation and Policy Missteps
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Over the past decade, the Syrian pound (SYP) has faced a catastrophic decline, plummeting from approximately 50 SYP per US dollar in 2011 to around 13,000 SYP in 2024. This dramatic devaluation went hand in hand with hyperinflation, pushing the consumer price index from 148 in 2011 to an astonishing 40,499 in 2024. The economic fallout has been devastating, with over 70% of Syrians now living below the international poverty threshold of $3.65 per person per day.
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Through its SERAJ (Economic Renewal Journey) Program, LIMS attributed Syria’s monetary crisis to the unchecked expansion of money supply. The Syrian government has been heavily reliant on printing money to finance its fiscal deficits, a practice that has led to inflationary pressures and the depreciation of the currency. Without sufficient foreign reserves, access to international capital markets, or structural economic reforms, the government has resorted to monetizing its debt, exacerbating the crisis.
As policymakers debate whether Syria should adopt a floating exchange rate, a fixed peg, or a managed float, LIMS argues that these discussions overlook the core issue: excessive money printing. Regardless of the monetary regime, an undisciplined expansion of the money supply will inevitably lead to depreciation and economic instability. The real solution lies in adopting a strict, rule-based monetary framework that limits the government's ability to create money indiscriminately. LIMS outlines several potential mechanisms to restore confidence in the Syrian pound and curb inflation.
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References
LIMS Media Interviews
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Lebanon Finally Elects a President
- What Economic Breakthroughs Await Lebanon If A President Is Elected Tomorrow? 9-Jan-2025. Leb Economy, Article AR
- After The Election Of The President, Are There Any Economic Reforms? 10-Jan-2025. Al Jadeed, Video Interview AR
- Joseph Aoun Imitates Fouad Chehab: Reforms That Reassure Lebanese And Arabs. 10-Jan-2025. Al Modon, Article AR
- Commitment To Promises.. Key Challenges. 11-Jan-2025. Asharq Business, Article AR
- These Are The Economic Challenges Facing The New Era. 13-Jan-2025. Al Anbaa, Article AR
- Lebanon.. Hopes For The Ability Of The Upcoming Government To Find Solutions To The Economic Crisis. 23-Jan-2025. France24, Video Interview AR
- The Economic Priorities Of The “New Era.” 27-Jan-2025. Al Jadeed, Video Interview AR
Joseph Aoun’s Election Raises Confidence, but Currency Remains Steady
- Before The Presidential Election Session... What Is The Truth Behind The Dollar's Decline? January 2, 2025. Anbaa Online, Article AR
- How Did The Central Bank's Adoption Of The "Hidden" Currency Board Contribute To Exchange Rate Stability? January 24, 2025: Radio Liban, Audio Interview AR
Lebanon’s Path to Electricity Reform: Can Privatization Solve the Crisis?
- The Generator State: Cancer, Moving Fires, And "Beirut" Pays The Price. January 11, 2025: Nida Al Watan, Article AR
- A Roadmap For "Illuminated" Electricity With A Regulatory Body Opening The Sector To Competition, January 21, 2025: VDL, Video Interview AR
- Tackling The Chronic Electricity Crisis: A Roadmap That Translates The Oath Speech, January 22, 2025: Al Joumhouria, Article AR
- For These Reasons, Everyone Is Running Away From “Energy”, January 26, 2025: Lebanon Debate, Article AR
- Electricity Stations From "Dimit" To "Bater" Without Doors, January 27, 2025: Nida Al Watan, Article AR
Rebuilding Lebanon: A Strategy for Post-War Recovery
- Patrick Mardini To Sawt Beirut: This Is The Biggest Challenge Facing Lebanon In 2025, January 2, 2025: Sawt Beirut, Article AR
- There Are Two Dangers Resulting From The Removal Of Debris From The Last War In Lebanon. January 3, 2025: VDL, Video Interview AR
- Tax Evasion Is A Problem That Has Existed For Years, Will It Be Solved With The New Era? January 30, 2025: The Munathara Initiative, Video Interview AR
- Al Habtoor's Leaves Lebanon: An Analysis of the Motives and Implications, January 31, 2025: Al Hurra, Article AR
Lebanon’s Banking Paralysis: An Exist Strategy
- Depositors' Money Is A Debt, And The State Must Settle It, January 20, 2025: Beirut 24, Video Interview AR
- The Solution To The Deposit Issue Starts With The State, January 22, 2025: This Is Lebanon, Video Interview AR
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