Document of The World Bank Group FOR OFFICIAL USE ONLY Report No. 75814-LB INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL FINANCE CORPORATION PROGRESS REPORT ON THE COUNTRY PARTNERSHIP STRATEGY FOR LEBANESE REPUBLIC FOR THE PERIOD FY11-FY14 April 18, 2013 MNCO2 Country Management Unit Middle East and North Africa Region Strategy Unit Middle East and North Africa Region International Finance Corporation This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY AND EQUIVALENTS Fiscal Year January 1 to December 31 (Exchange Rate Effective April 2, 2013) Currency Unit = Lebanese Pound (LL) LL1,507.5 = US$1 ABBREVIATIONS AND ACRONYMS AAA Analytical and Advisory Activities LBP Lebanese Pound BdL Banque du Liban (Central Bank of Lebanon) LNG Liquefied Natural Gas BLC Banque Libanaise pour le Commerce LTF Lebanon Trust Fund CAS Country Assistance Strategy MDTF Multi Donor Trust Fund CPS Country Partnership Strategy MEHE Ministry of Education & Higher Education EC European Commission MENA Middle East and North Africa EdL Electriciti du Liban (Lebanon Electric) MIGA Multilateral Investment Guarantee Agency EDP Education Development Project MILES Macro-economy, Investment Climate, Labor, Education and Social Protection ESW Economic Sector Work MOEW Ministry of Energy and Water FY Fiscal Year MOF Ministry of Finance GDP Gross Domestic Product MTEF Medium-Term Expenditure Framework GEF Global Environment Facility NPTP National Poverty Targeting Program GoL Government of Lebanon SEF Sustainable Energy Finance IBRD International Bank for Reconstruction & SIL Specific Investment Loan Development ICT Information and Communication Technology SME Small and Medium Enterprises IDF Institutional Development Fund TA Technical Assistance IFC International Finance Corporation TF Trust Fund IL Investment Lending WBG World Bank Group IBRD IFC Vice President Inger Andersen Dimitris Tsitsiragos Director Ferid Belhaj Mouayed Makhlouf Task Manager Mouna Couzi Thomas Jacobs ACKNOWLEDGEMENTS The World Bank Group greatly appreciates the close and fruitful collaboration with the Government of Lebanon in the preparation of this Country Assistance Strategy Progress Report (CASPR). This CASPR was prepared by members of the World Bank Group's Lebanon Country Team, including Mouna Couzi, Thomas James Jacobs, Pilar Maisterra, Janette Uhlmann, Anne Njuguna, Mary Eunice Barroso, Stefano Mocci, Haneen Ismail Sayed, Claire Kfouri, Chantal Reliquet, Simon Stolp, Ziad Nakat, Eric Le Borgne, Chadi Bou Habib, Wael Mansour, Randa Akeel, Juan Manuel Moreno, Gustavo Demarco, Angela Elzir, Alaa Sarhan, Paul Prettitore, Fabian Seiderer, Victor Mulas, David Satola, Ingrid Ivins, Victoria Gyllerup, Yousra Mohamed Abdelrahman, Rapti A. Goonesekere, Amal El Karagy, Persephone Economou, and Bushra Ghulam Mohammad under the overall leadership of Ferid Belhaj. ii COUNTRY PARTNERSHIP STRATEGY FOR FY11-FY14 LEBANESE REPUBLIC CONTENTS I. INTRODUCTION ....................................................................1 II. DEVELOPMENT CHALLENGES..........................3...... .......................3 III. PORTFOLIO PERFORMANCE AND LESSONS LEARNED. .............. .....................7 IV. PROGRESS TOWARDS ACHIEVING CPS OBJECTIVES AND OUTCOMES ..................... 11 V. THE WAY FORWARD .................................................. ............ 13 VI. RISKS ............................................................................ 15 TABLES Table 1: Lebanon: Selected Economic Indicators, 2009-20 15............. ................4 Table 2: Summary of CPSPR Findings on the FYI 1-13 CPS Results Matrix ..... ......... 12 Table 3: World Bank Program for the period FY1 1-FY14 ................................. 15 Annexes Annex I: CPS Results Matrix and Progress to Date .................................. 17 Annex II: Detailed Overview on Progress to Date under the Various Sectors .. ..............27 Annex A2: Lebanon at a Glance ................................ ...... ........32 Annex B2: Selected Indicators of Bank Portfolio Performance & Management . ............35 Annex B3: IFC Investment Operations Program. ............................ ......36 Annex B5: Social Indicators ........................................ .........37 Annex B6: Key Economic Indicators ...........................................38 Annex B7: Key Exposure Indicators ...........................................40 Annex B8a: IBRD Operations Portfolio and Grants ..................................41 Annex B8b: Statement of IFC's Committed and Outstanding Portfolio ..................42 Annex B8c: MIGA Outstanding Exposure .......................................43 111 PROGRESS REPORT - COUNTRY PARTNERSHIP STRATEGY (FY11-FY14) LEBANESE REPUBLIC I. INTRODUCTION 1. This Progress Report assesses the implementation of the World Bank Group's (WBG) Country Partnership Strategy (CPS) for Lebanon for FY11-FY14. Preparations for the CPS followed three years of political instability in Lebanon, in the aftermath of the Israel-Lebanon hostilities in 2006. The hostilities instigated a deep political divide which paralyzed Parliament and the Government and increased political violence. After the Doha Accord in 2008, and the formation of a National Unity Government in November 2009, a period of political stability paved the way for a renewed focus on the critical reforms to improve Lebanon's fiscal and debt sustainability, create employment, provide adequate infrastructure and social services, and support social inclusion. 2. The CPS discussions, which began with the Government in early 2010, were aimed at putting the economy on a path to sustained broad-based economic growth, by focusing on four strategic goals over a period of four years: (i) Growth and Fiscal Sustainability; (ii) Competitive Business Environment; (iii) Economic Infrastructure (electricity, water, transport, environment and waste management, local development); and (iv) Human Capital Development and Social Protection. 3. The CPS envisaged a program of investment lending, as well as analytical and advisory services (AAA) through the existing portfolio complemented by new lending ranging between US$375 and US$550 million. This program is supported by investments and advisory services provided by the International Finance Corporation (IFC). The CPS is anchored in the country's sectarian and consensus-based political reality, which makes it hard to pursue ambitious reforms. 4. The CPS envisaged a two-tiered approach: (i) a Core Program of engagement consisting of the existing portfolio, selected new investments in basic services, as well as technical assistance and analytical work to inform and build momentum around key reforms (Tier I); and (ii) a deeper engagement in additional areas where traction for reform would develop, including budget support should Lebanon implement a sound macroeconomic framework and introduce a robust reform program positively impacting the fiscal situation (Tier II). Progress on implementation of the Core Program would be assessed regularly, with the Government of Lebanon (GoL) and the Bank Group agreeing on areas for possible scale-up of WBG engagement. 5. The difficult country context and the political and economic impact of exogenous shocks instigated by the spillover of the Arab Spring, especially the uprising in neighboring Syria, have strongly affected Lebanon. The influx of Syrian refugees has had not only a humanitarian dimension but also developmental consequences. To date, there are 427,000 people registered as refugees or awaiting registration with UNHCR (up from 120,000 in November 2012) with many more not registered. It is expected that the number will continue to grow and possibly reach one million by year end. This displacement is putting a strain on hosting communities that already face challenges in terms of service delivery and poverty levels. The turmoil in Syria is also affecting the Lebanese economy more generally, both in terms of increased risk premia vis-A-vis private sector investment and blocked trade routes. 6. A total of US$297 million in new IBRD commitments have been made since the start of CPS implementation in the areas of water, education, cultural heritage and SME financing (see Table 3). In addition, the Social Protection and Promotion Project (US$30 million), and the Mobile 1 Internet Ecosystem Project (US$6.4 million) are envisaged to be presented for Board approval before the end of FY13. IFC has committed around US$680 million between FY11 and FY13 in a combination of loans, guarantees and equity investments in banking, microfinance, insurance and Information and Communication Technology (ICT). In addition, IFC has provided a range of advisory services to: (i) scale up Sustainable Energy Finance; (ii) increase access to finance for SMEs (with a particular focus on women-owned SMEs); (iii) develop the "ARZ" green building rating system; and (iv) conduct a series of green building assessments. 7. Progress on structural economic reforms, however, has not been achieved. This is due to the continuous political tensions, which culminated in the resignation of Prime Minister Najib Mikati on March 22, 2013. Mikati had formed his Government in June 2011 after five months of difficult consultations. The current Government has assumed a caretaker role, until a new Cabinet is formed by PM-designate Tammam Salam. Continuous political fragmentation has hindered the Government's ability to reach consensus on economic reform and on addressing the country's infrastructure deficiencies. 8. A notable exception is the Energy Sector. The Government was able to start addressing the sector's constraints and approved in June 2010 the Policy Paper for the Electricity Sector, which establishes a road map for investments and reform. Although some progress has been made, broader sector reforms remain at risk due to potential lack of public financing and difficulties inherent to Lebanon's political economy. 9. The strategic thrust of the CPS and two-tiered approach remains relevant. However, the heightened risks and their impact on the country program since the discussion of the CPS in 2010 requires a revision of the more ambitious goals. Economic and social vulnerabilities, as well as internal and regional risks identified during CPS preparation have substantially increased. With the emergence of the Arab Spring and increased regional instability, the Bank Group's assistance program has been characterized by a protracted period of uncertainty and political instability. As such, scaling back of the strategic goals is warranted (Strategic Goal 1 has been recast as: Strengthened Fiscal and Public Financial Management; and Goal 2 has been narrowed to: Improved Competiveness). 10. Nonetheless, progress has been made towards achieving CPS milestones and outcomes. Reforms in certain sectors have progressed, albeit timidly, and a number of the indicators under the four pillars have been met or are on track to be met. The Results Matrix presented in Annex 1 has been revised to reflect more realistic, gender-sensitive and measurable targets by ensuring alignment with the country's program for the end of the CPS period. Going forward, new projects will incorporate a systematic integration of gender issues. 11. The Bank Group will continue to support the Government with lending for investments in key economic infrastructure, as well as technical assistance and analytical work that will inform and build momentum around key reforms. Complementing the existing program, stronger focus will be placed on transformational sectors that show potential for progress under the present circumstances, e.g. the electricity sector, with promising government and stakeholder consensus, the water sector as per the priorities identified in the National Water Sector Strategy, and possibly transport. The Bank will also continue to monitor the escalating Syrian crisis, and its socioeconomic, fiscal and developmental ramifications, while evaluating the impact of this risk on the WBG program. 2 II. DEVELOPMENT CHALLENGES 12. The CPS strategic thrust remains relevant in light of the country's persisting development challenges, which have been compounded by regional developments. The conflict in neighboring Syria over the past two years has imposed a security, political, and economic toll on Lebanon, fueling division along sectarian lines, and sparking repeated incidents of violence across the country. These incidents have materially impacted the economy and diverted the Government's attention from the envisaged reform process towards more immediate political and security concerns. 13. Growth performance has remained below potential due to the country's macroeconomic volatility, infrastructure bottlenecks, inadequate support to innovation, distorted product and labor market regulations, and weak governance. The economy continues to struggle to generate jobs necessary to absorb high unemployment and new entrants to the labor force. Unemployment remains especially high among youth and women. The majority of the labor force continues to be employed in low productivity service jobs and only 29 percent of workers are in formal wage employment, i.e., with access to social security and protected by labor regulations. The macro-fiscal framework remains fragile, posing challenges for medium-term growth 14. Lebanon's growth spurt stopped in 2011, in part due to regional turmoil, domestic political uncertainty and repeated security incidents. After growing by an average of 7.5 percent in the four years through 2010, real GDP growth slowed to an estimated 3 percent in 2011 and to 1.4 percent in 2012 (Table 1). Key drivers of the slowdown were tourism, services, exports and construction. Contingent on an improved political and security situation, a moderate rebound in economic growth is projected for 2013 (to 2.3 percent). Key risks to the outlook are the uncertainties linked to the June 2013 parliamentary elections, and spillovers from the Syrian civil war. 15. Key structural reforms are required to overcome deep-rooted obstacles if higher growth rates are to be achieved. Severe bottlenecks remain in infrastructure, especially in electricity, transport and water, which will require significant levels of investment. Moreover, economic volatility (including dependence on foreign financial inflows), inefficient public spending, anticompetitive laws and practices, and low incentives to innovate need to be addressed not only to improve growth and job creation, but also to facilitate necessary fiscal adjustment. 16. Maintaining a prudent approach to economic management in the midst of a volatile political and security environment remains critical. Lebanon's (large) financial sector is feeling the effects of the Syrian crisis and regional uncertainties. High fiscal and current account deficits increase exposure to shocks. Careful fiscal management is crucial, particularly in light of the substantial exposure of commercial banks to sovereign risk. 17. The improvement in public finances was overturned in 2012, in part due to a structural increase in expenditure. From 2006 to 2012, public debt decreased by 47 percentage points of GDP, primarily driven by record economic growth. During that period, the fiscal deficit shrank from 11.1 to 6.4 percent of GDP, mostly due to cyclical factors. 2012 marked a sharp reversal in fiscal consolidation: the primary central government surplus shrank by 3.7 percentage points of GDP to a deficit of 0.7 percent of GDP. Revenue performance weakened following the deceleration of the economy while expenditure expanded briskly, mostly due to the cost of living adjustment for public sector workers. Public debt remains high at 134.3 percent of GDP in 2012. 18. Amid an accommodative monetary stance, money supply and lending to the private sector remained buoyant. Money supply (M3) increased by 6.7 percent (yoy) in end-2012 thanks to 3 the continuous inflow of foreign deposits attracted by the wide LBP-USD spreads. Notwithstanding rising sovereign credit risk, the dollarization rate of deposits remained stable. Lending to the private sector grew broadly in line with nominal GDP growth. To further stimulate the economy, BdL introduced a US$1.46 billion stimulus package providing discounted financing to the housing sector and some innovative economic activities. Table 1: Lebanon: Selected Economic Indicators, 2009-2015 2009 2010 2011 2012 2013 2014 2015 Act. Prel. Est. Proj. Real sector (annualpercentage change, unless otherwise specified) Real GDP 8.5 7.0 3.0 1.4 2.3 4.0 3.8 Real GDP per Capita 7.7 6.2 2.3 0.7 1.5 3.2 3.0 Money and prices CPI Inflation (p.a) 2.8 4.9 5.7 5.7 4.9 3.7 3.0 Money (M3, including non-resident deposits) 23.1 12.1 7.1 6.1 8.0 10.0 10.0 Investment & saving (percent ofGDP, unless otherwise specified) Gross Capital Formation 34.7 33.9 29.8 29.4 30.0 31.3 31.2 Gross Domestic Savings 6.9 5.9 12.1 8.8 9.6 11.0 11.4 Central Government Finance Revenue (including grants) 24.7 22.8 23.5 23.0 23.2 23.5 23.5 Total expenditure and net lending 33.4 31.0 29.8 31.8 32.1 31.7 31.8 Overall balance (deficit (-)) -8.7 -8.2 -6.4 -8.9 -8.9 -8.3 -8.3 Primary Balance (deficit (-)) 2.4 2.3 3.0 -0.7 -0.7 -0.1 0.0 Extemal sector Current Account Balance -19.5 -20.4 -12.1 -14.4 -15.7 -16.4 -16.9 Trade Balance (GNFS) -24.1 -26.1 -17.7 -20.6 -20.4 -20.3 -19.8 Gross Reserves (months of imports GNFS) 18.4 18.4 18.4 18.3 17.9 17.3 16.6 Total Public Debt Debt-to-GDP ratio (percent) 147.6 141.7 133.8 134.3 134.2 132.9 132.9 Memorandum Items: Nominal GDP (in billion LBP) 52,236 55,965 60,442 64,740 69,420 74,724 79,727 Exchange Rate, Average (LBP/US$) 1,507.5 1,507.5 1,507.5 1,507.5 1,507.5 1,507.5 1,507.5 GDP (in million US$) 34,651 37,124 40,094 42,945 46,050 49,568 52,887 Source: Government data, and World Bank staff estimates and projections. 19. Lebanon faces significant fiscal challenges going forward. Based on current policies, the fiscal deficit is projected to remain elevated, at 8.9 percent of GDP in both 2012 and 2013. With limited fiscal space, pressures on the expenditure side (e.g., increase in public sector wages) would likely require a strengthened tax take. Revenue measures, however, have repeatedly stumbled due to a lack of political and social consensus. If implemented without revenue offset, the proposed change in the structure of salary scales could weaken the Lebanese economy through the return of unsustainable debt dynamics, pressures on the peg, lower economic growth, and increased unemployment. Reforming the public sector pension system would further reduce the negative impact, but such reform cannot be separated from the need for strengthening social safety nets. 20. The Syrian civil war exposed Lebanon's internal weaknesses and negatively impacted economic growth. While the economy was already slowing down in 2011, the Syrian conflict accelerated that movement. Private consumption dropped as precautionary saving rose due to security concerns. Uncertain final demand and security concerns have also affected private investment. Additionally, the political deadlock in the country, linked to the events in Syria, impeded long awaited reforms to improve the business environment, tackle infrastructure bottlenecks, increase 4 competitiveness, and facilitate access to credit. Government consumption, however, slightly increased as a direct result of the crisis due to spending on public services such as education, health, and security. The Syrian crisis also put negative pressures on net exports. 21. Lebanese banks have proved resilient to regional turbulence. Seven Lebanese banks are currently operating in Syria. Their market share before the crisis was around 22 percent of total Syrian deposits. Lebanese banks' assets in Syrian branches are estimated at US$2 billion and belong to strong banks, which have adequate reserve coverage and therefore do not impose an unreasonable added risk. These banks have increased their provisions to cover these losses. This will impact their profitability in the short term. However, the medium-term outlook remains positive. Lebanese banks are also impacted by the Cyprus banking crisis as their branches hold an estimated US$2.5 billion in deposits. The impact is, however, seen as minor by markets with Lebanese banks' stock prices largely unaffected by the surprise announcement of the tax on deposits. The business environment is still in need of reform 22. The Private Sector continues to suffer from the cost of transaction-based taxes regulatory compliance and unfair competition. Corruption plays a significant role in the application of taxes and regulations, public service connections, and public procurement. Although corporate tax rates are not high, a variety of indirect taxes, duties and fees applied on transactions impose a high cost on day-to-day business operations and discourage formality. 23. A number of laws have been prepared and sent to Parliament where they remain pending. Weak coordination among government agencies reduces the quality and impedes the implementation of reforms at the national level. While decrees relating to company dispute resolution, arbitration and mediation are in effect, laws on competition, procurement, e-Commerce, and collateral as well as updates to the commercial code, trademark law and company law are awaiting Parliamentary ratification. Preparations continue on the insurance, insolvency/bankruptcy, construction and urban laws and on the commercial registry. 24. Political instability continues to impede the development of efficient public-private dialogue. When it exists, the public-private dialogue is personalized, informal and non-transparent. Lack of coordination among civil society, universities, private sector and the diaspora hinders a structured and comprehensive debate about economic and financial issues. While the Lebanese private sector has some comparative advantages in the ICT sector, it has been unable to scale up for lack of a well-structured public-private dialogue on strategic priorities. Weak infrastructure services remain a major constraint for economic growth 25. Continued under-investment and the slow pace of reform have not improved the perilous state of the Lebanese electricity sector. Public supply covers around 60 percent of electricity demand, while technical and commercial losses exceed 30 percent of the generated production. Generation and distribution assets are in poor condition and expensive fuel continues to be used for generation in the absence of lower cost natural gas, while power tariffs have not been revised since 1996. As a result, the sector cost the Government in 2012 over US$2.2 billion in fuel subsidies per annum, or about 4 percent of GDP, representing almost half of the overall fiscal deficit of the country. The fiscal burden represented by the sector will become worse, if the current short- term infrastructure investments are completed without moving forward with meaningful institutional and financial reforms. The Government is, however, moving forward in developing its offshore oil The Minister of Finance has introduced new e-taxation measures aimed at reducing the cost of paying taxes. 5 and gas resources and is launching the tender process for the first licensing round for offshore gas and oil exploration. 26. Lebanon's water supply sector continues to be unable to meet demand, and service provision remains weak. Currently, average technical and commercial losses of water are as high as 40 percent and further aggravate supply shortages. Small scale private water vendors, most of whom are unregulated and many of whom are illegal, provide water of dubious quality. Unless measures are taken to improve distribution efficiency and increase storage capacity, chronic water shortages are expected to occur as early as 2020. 27. Similarly, transport remains a major constraint on economic and social development. Institutional capacity to oversee urban transport services is weak, and regulations to ensure minimum levels of quality and safety are rarely enforced. Although international and primary roads are well distributed throughout the country and in good condition, secondary and local roads are in a poor state with less than 20 percent considered to be in acceptable condition. The GoL continues to face major challenges in enforcing traffic rules and regulations, promoting private sector investments in urban transport services, and mobilizing funding to carry out regular road maintenance. Public transport services need to be better organized and developed. Moreover, excess costs, time-intensive port clearance and land border crossings continue to impact Lebanon's competitiveness in trade. Although considered a priority by the Government, the Environment sector remains neglected 28. Until recently, the Environment sector has been a secondary priority, characterized by an incomplete legal framework and ineffective policies. Environmental neglect has had an impact on the economy resulting in a degradation amounting to US$800 million in 2005 (equivalent to 3.7 percent of GDP). Domestic and industrial discharge is released largely untreated in nature, and the pollution of water resources is compounded by agricultural and dumps runoffs. The Ministry of Energy and Water (MOEW) launched a National Wastewater Strategy in December 2012, and the Government's National Municipal Solid Waste Strategy is to be finalized by June 2013. No strategy exists for air pollution management although a number of air monitoring stations are being installed and managed on an ad hoc basis. Social vulnerabilities remain significant 29. Poverty remains significant and regional disparities in living conditions are acute. Nearly 27 percent of the Lebanese population, or 1 million people, are poor, living on less than US$4 per day, with an estimated 8 percent, or 300,000 people, living on less than US$2.40 per day. Poverty is significantly higher in some regions, such as the North, which accounts for 21 percent of Lebanon's population. Almost 40 percent of the poor and 46 percent of the extreme poor are concentrated in slums around major cities. Over half of Lebanese citizens are able to cover only basic needs, and 63 percent are not able to afford the basic necessities at some time. Of those who do have surplus, almost 30 percent save for unexpected emergency/medical expenses, and only 7 percent save to invest capital in business or assets. 30. The influx of displaced Syrians is imposing a significant burden on Lebanon's ability to provide services to local hosting communities and to the refugees. A large number of Syrians have settled with host communities, many of which are already experiencing high levels of poverty. Lebanese host communities are therefore bearing the brunt of the crisis, with emerging tensions related to issues such as increasing rents, rising prices, and competition for livelihood opportunities. Service provision, local governance strengthening, agricultural sector support, and civil society 6 assistance will be required along with infrastructure repair, livelihood assistance, and provision of shelter. 31. Primary healthcare services continue to be dominated by the private sector, as over 80 percent of facilities are privately owned. Only 10 percent of the population uses non-governmental primary care centers, and only 20 percent of the population relies on a family physician. Maternal mortality (150 deaths per 100,000 live births), is relatively high compared to other countries with similar incomes. Weaknesses in the primary care system contribute to higher health care costs, reduce the quality of care and generally worsen the equity of health service delivery. Approximately half of the population is formally uninsured and more than 60 percent of total health spending is paid out of pocket by households. 32. The economic downturn over the past two years has exerted pressure on household incomes, with rising food and energy prices taxing the poor and vulnerable. Geographic disparities are striking within the country, as infrastructure investment and service delivery remain concentrated in the Greater Beirut area. Moreover, Lebanon's North, the country's most impoverished area, is feeling the effects of a sustained influx of displaced Syrians, putting the Government's already constrained ability to deliver basic services under further pressure. The CPS program remains relevant to support Government's priorities 33. A Rapid Progress Review, conducted with GoL in September 2011 following the first year of CPS implementation, recognized the persisting development challenges identified in the strategy and the validity of the Bank Group's focus. The slow progress achieved in structural reforms over the past two years further reinforces the urgency of addressing the CPS' priority areas: declining private investment and heightened regional risks highlight the need for improving competitiveness; lack of investment and growing demand call for improvement of basic infrastructure services; high unemployment and low growth highlight the necessity for interventions in the labor market, and for investments in public education; lastly, the deterioration of the fiscal situation, combined with sluggish growth and increased unemployment, calls for an efficient and inclusive social protection system for the most vulnerable. Continued attention to these challenges and to building strong momentum for reform remain central to Lebanon's development prospects. III. PORTFOLIO PERFORMANCE AND LESSONS LEARNED Portfolio performance is mixed 34. Portfolio Overview: As of March 31, 2013 the portfolio consists of 14 active projects financed from a variety of sources including: IBRD, Lebanon Trust Fund (LTF), State and Peace Building Fund (SPBF), Institutional Development Fund (IDF), and Program on Forests (PROFOR) resources. These financing sources support interventions in sectors that include education, social protection, urban development, transport, water, environment, private sector, social services, telecommunications, and fiscal management reform, and represent a total commitment of US$477.7 million, of which a total of US$147.2 million has been disbursed. Four out of 14 projects are in problem status: (i) the Second Emergency Social Protection Implementation Support Project (US$6 million; LTF) is undergoing restructuring to address unsatisfactory implementation of one of its components; (ii) both the Second Education Development Project (US$40 million; IBRD) and the Greater Beirut Water Supply Project (US$200 million; IBRD) experienced effectiveness delays due to lengthy Parliamentary ratification procedures; and (iii) the National Volunteer Services Program (US$2 million; SPBF) was delayed in meeting effectiveness conditions which hindered 7 implementation. The Lebanon portfolio is challenging as existing macro, governance, organizational, and capacity issues are further compounded by the country's complex political economy2. 35. The underlying causes of mixed portfolio performance relate largely to the macro and policy environment of the country which affects project implementation. For example, the two loans approved by the Board since the launch of the CPS (the Greater Beirut Water Supply Project and the Second Education Development Project), experienced significant delays in becoming effective, due to repeated delays in Cabinet approval, GoL loan signature, or Parliamentary ratification. 3 These projects were only declared effective in 2012, 19 months after they were approved. With elections looming and Lebanese political forces shifting into campaign mode, it is likely that the remaining two projects approved by the Board since the launch of the CPS (the Cultural Heritage and Urban Development Additional Financing and the Innovation and SME Project) will face similar delays. 36. Disbursement during the CPS period also reflects the impact of effectiveness delays. In FY11, the average disbursement ratio for Lebanon stood at 44 percent, compared to 11 percent for the MNA Region and 22 percent for the Bank, placing Lebanon as the second best performer in the MNA Region. An increase of the disbursement ratio in FY11 versus FY10 was largely driven by the acceleration of disbursements of several projects nearing their closing dates. However, in FY12 the average disbursement ratio declined to 6 percent. The disbursement ratio now stands at only 3.5 percent. Declining disbursement can be attributed to the above-mentioned delays in effectiveness of the Greater Beirut Water Supply Project and the Second Education Development Project. 37. IFC's Investment Portfolio stands at US$223 million in 12 companies as of end December 2012 and continues to perform well. The portfolio is concentrated in the financial markets sector (particularly trade finance) followed by manufacturing and services. Guarantees to banks to facilitate trade flows totaled US$676 million. With US$370 million of guarantees in FY12, Lebanon was the most active user of the Global Trade Finance Program in the MENA region. In addition, a US$2 million equity investment was made in an early-stage ICT firm based in Tripoli helping to expand operations and more than double its staff, while US$124 million in equity was invested in Medgulf SAL, a Lebanese insurance company active across the MENA region. IFC also committed a US$2 million loan to a local microfinance institution, IFC's first investment in the sector in Lebanon, and an US$8 million investment was approved to finance the improvement of distribution and collection services in the electricity sector. Trust Funds play a key role in the Lebanon Portfolio 38. Trust Funds are integrated in the Bank's portfolio and support critical institutional development. Bank-administered trust funds, including the Lebanon Trust Fund (LTF)4, finance a number of activities including: (i) improvement of Lebanon's social services; (ii) support to the Telecommunications Regulatory Authority; (iii) improvement of water resources and agricultural management; (iv) increase in youth civic engagement to improve youth employability and strengthen social cohesion; and (v) assistance to the GoL and EdL in managing PCB inventories and disposal 2 Because of the macroeconomic situation and political environment, as well as a track record of unsatisfactory project outcomes, Lebanon projects receive two risk flags (Country Environment and Country Record) from inception. When political tensions escalate, political parliamentary blocs resort to boycotting parliamentary work. While the Parliament has a constitutional responsibility to ratify all foreign loans and to examine draft laws referred by the Cabinet, the legislature has been beset by repeated lack of quorum, which has resulted in repeated delays of the ratification of World Bank projects. 4 The Lebanon Trust Fund (LTF) was approved in September 2006 to assist in the rehabilitation of damaged infrastructure, and recovery following the July/August 2006 hostilities. A total grant of US$70 million was transferred from IBRD surplus to the Trust Fund. 8 options. Currently, there are nine active projects financed by trust funds (two by LTF, three by SPBF, three by IDF, and technical assistance by PROFOR) for a total of US$14.5 million. One of the recently approved IDF Grants aims to support civil society capacity development in the Ba'albeck- Hermel area. Specifically, the Grant will help poor communities secure their ID cards and other key documents. The Grant has a strong gender focus and is expected to benefit around 800 women through the provision of training and seminars on self-representation. The Trust Fund for Lebanon was established to promote recovery from the 2006 conflict and provides a good example of Bank/IFC integration. US$15 million of the LTF has enabled IFC to finance risk sharing facilities and advisory projects and assist SMEs in gaining access to finance. In addition to funding a range of IFC advisory projects, the LTF helped IFC leverage an additional US$120 million of SME finance from local banks. Given this success, extension of the trust fund beyond its current 2014 end date is being pursued. 39. A good share of the operations envisaged under the CPS has been approved, with US$297 million of new IBRD commitments provided in FY 11-FY13 for four investment operations in the water, education, cultural heritage and urban development, and private sectors. The level of new financing made available to the GoL during the first two and a half years of the CPS is in line with the Tier I scenario, which envisaged a program concentrated on new investment lending complemented by Analytical and Advisory Activities (AAA). The Bank's portfolio is complemented by outreach efforts and close partnership with other donors 40. Over the past two years, the World Bank Group scaled up external communications, civil society outreach and partnerships. The Bank Group has worked closely with the Government to support communications through various workshops and consultative forums to disseminate the results of studies and sustain momentum on policy reform, including business environment, public financial management, energy, water, transport, regional development, education and social protection. Public outreach was carried out under the 800-household survey on water connections in the Ba'albeck area with PPIAF funding to determine the principal barriers to connecting households to the infrastructure, which is key to the economic and financial sustainability of the water utility.5 A new effort to reach out to Parliament is underway, with a view to sensitizing the legislative branch to the scope and objectives of the Bank's engagement in Lebanon, and to seek Parliamentarians' views. 41. At the same time, donor coordination continues in support of the Government's economic reform program, as well as through a broad range of Bank activities. Multi and bi-lateral donors, including Canada, Italy, France, Agence Frangaise de D6veloppement, Arab Fund, Kuwait Fund, Islamic Development Bank, the European Union and the Swiss State Secretariat for Economic Affairs, actively co-finance or collaborate with the Bank Group in the areas of Water, Energy, Cultural Heritage and Urban Development, Urban Transport, Environment, Social Protection and Investment Climate. The Bank Group will continue to play a key role in leveraging donor flows in the coming period, particularly in the areas of energy and transport. 42. Lessons learned from closed projects: Four projects have closed over the CPS period: the First Municipal Infrastructure Project (US$30.1 million LTF); the Beka'a Emergency Water Supply Project (US$15 million LTF); the Ba'albeck Water and Wastewater Project (US$43.5 million IBRD); and the Emergency Power Sector Reform Capacity Reinforcement Project (US$5 million The survey included questions on the gender impact of the Beka'a Regional Water Establishment's service delivery, which allowed for an assessment of different gender experiences of access to and usage of water at the household level. This allowed for a better understanding of how to operationalize gender in the water sector. Lessons learned are being applied to the Greater Beirut Water Supply Project and to assist MOEW with implementation of the National Water Sector Strategy. 9 LTF). Several lessons from these operations will be useful in terms of informing future engagement in these important sectors. * In the Water sector, and despite the Ba'albeck and West Beka'a projects having provided target beneficiaries with significantly improved access to municipal water and sanitation services, subscriptions to the regional water authority lagged over the project period, with many residents preferring to obtain water through other more expensive sources. The rebuilding of trust in publically provided services and subsequent modification of consumer behavior is a lengthy process that must be accounted for in the design and implementation of projects. This issue is especially relevant in water supply augmentation projects, such as the Greater Beirut Water Supply Project, currently under implementation. * The Emergency Power Sector Reform Capacity Reinforcement Project informed the development of the Government's Policy Paper for the Electricity sector, which is now the cornerstone of the reform program. The Project also supported the investigation of Liquefied Natural Gas (LNG) as a lower cost, more environmentally friendly option for power generation. This encouraged the Ministry of Energy and Water to move ahead with plans to develop an LNG facility. However, the Project's support for corporatization of EdL failed to navigate the complex political economy surrounding this issue, and highlights the significant politicization that will likely complicate progress on any higher-level reform agenda. * While initial results of IFC projects are encouraging, local banks' perception of high risk associated with SMEs and atypical market segments (e.g., women-owned businesses, and sustainable energy) continues to restrict lending; innovative approaches are needed to reach these underserved markets. The proposed extension of the Trust Fund for Lebanon for a further 6 years provides an opportunity to encourage further outreach to SMEs without ready access to traditional bank financing. 43. Main lessons for future CPS design and implementation: Bank assistance to Lebanon will continue to be subject to substantial risks and will require flexibility to respond to emerging challenges and changing priorities. The following important lessons can be drawn: * The overall fragile economic and political environment requires a flexible approach to the work program so that the team can adapt to changing circumstances. Flexibility, informed-risk taking and pragmatism are essential to successful engagement in such a dynamic and uncertain operating environment. * Lending and analytical work should be deployed strategically, carefully sequenced, and targeted to areas where there are realistic prospects for reform. AAA work in particular has an important role to play in supporting nascent reform efforts and informing subsequent lending operations. * Design simpler projects, use adaptable instruments and set realistic expectations. Give greater attention to outcome/impact indicators, avoiding ambitious outcomes that are unrealistic in the country context. * Project Readiness Filters. Ensure project readiness before approval, and all conditions of effectiveness are met during preparation. * Effectiveness/ratification delays. Work closely with GoL in facilitating - to the extent possible - the project effectiveness process through direct outreach to Parliament. Such discussion has started already with members of Parliament. * Expand outreach and partnership with Government and civil society, including the private sector, free media, and islands of public sector excellence. Increase the involvement 10 of local authorities/NGOs in prioritization, decision making, and implementation of local level services. * Maintain a contingency to enable the Bank to support emergent or unanticipated needs. Full commitment of Bank Group resources would limit the Bank's ability to respond effectively in the event of crises, especially in social programs addressing the most vulnerable. IV. PROGRESS TOWARDS ACHIEVING CPS OBJECTIVES AND OUTCOMES 44. Because of the difficult country environment, a revision of CPS objectives towards more realistic goals was warranted. However, progress has been made towards achieving the CPS milestones and outcomes. The strategic goals were slightly revised towards less ambitious objectives (Strategic Goal 1 Strengthened Fiscal and Public Financial Management; Goal 2 Improved Competitiveness; Goal 3 Improved Economic Infrastructure; and Goal 4 Enhanced Human Capital Development and Social Protection). Reforms in certain sectors have progressed, albeit timidly, and a number of the indicators under the four pillars have been met or are on track to be met. Progress against the milestones under the four development goals of the CPS, based on the revised strategic goals, outcomes and indicators, is detailed in the Results Matrix (Annex I). A detailed report on progress to date can be found in Annex II. Goal 1 - Strengthened Fiscal and Public Financial Management Good progress on the outcomes for all underlying goals has been achieved. The outcome of better informed fiscal policy decisions was partially achieved for the area of strengthening the Fiscal Space. As for Public Financial Management (PFM), the outcome of improved transparency and control environment in public financial management was also partially achieved6. The outcome of enhanced capacity of Central Administration of Statistics (CAS) to carry out and analyze key survey for Statistical Capacity Building was also partially achieved. Through a component on "engendering" statistics funded by Bank TA, three analytical pieces were carried out by CAS on Gender and Education, Gender and Health, and Gender and Labor. The CAS now has a link on Gender statistics on their website and has launched a series called "Statistics in Focus", which initially covered Gender statistics and has since been expanded to cover other sectors. Goal 2 - Improved Competitiveness The underlying strategic goals for Business Environment have been partially achieved through support of the WBG program in the areas of Access to Finance for SMEs and Women Entrepreneurs, and in Telecommunications. The two new projects in these areas have been designed to be gender- informed, and to track the impact on women with the aim of reducing gender inequalities in access to employment and entrepreneurship opportunities. Goal 3 - Improved Economic Infrastructure Reforms in the Water sector have progressed well and the outcome of increased access to and reliability of potable water in targeted project areas was fully achieved. In the Electricity sector, the Bank provided technical assistance for the development of an Energy Efficiency Framework and an action plan for promoting energy efficiency measures in Lebanon. The outcome of improved capacity to implement the Government's electricity sector reform strategy has only been partially achieved to date. In the Urban Transport sector, the outcome of improved efficiency of existing urban transport infrastructure and traffic management in the city of Beirut and Greater Beirut Area 6 The institutional strengthening of the PFM project has contributed to the emergence of female managers at the Ministry of Finance (MoF). The two new units set up with the project support - the macro-fiscal and cash management units - are both managed by women. 11 has been fully achieved, as traffic management is being reformed through the implementation of a new Traffic Management program and the operation of a traffic management system. In the Local Development area, the outcome of basic services restored and support for local recovery and development are partially achieved to date. In the Environment sector, targets towards improved environmental management have been partially achieved. Goal 4 - Enhanced Human Capital Development and Social Protection The strategic goals in the Education sector are progressing slowly. However, progress in the implementation of the EDP II still needs to be determined given its recent effectiveness in January 2013 following extensive delays in Parliament ratification. In addition, the goal of improved availability of education data for decision making in the Ministry of Education and Higher Education is partially achieved. In the area of Social Protection and Social Safety Nets, although the planned reforms at the National Social Security Fund were dropped, good progress was achieved with the formal adoption of the National Poverty Targeting Program (NPTP) in 2009, as well as the approval of the New Entrants to Work program in 2011 by the Government. The NPTP has also ensured gender equality by aiming to target 50 percent of female beneficiaries for the provision of benefits. In the first round, out of the 84,322 total beneficiaries, 40,173 beneficiaries were female, or approximately 48 percent. Table 2: Summary of CPSPR Findings on the FY11-13 CPS Results Matrix (On the basis of revised CPS strategic goals, outcomes and indicators) Strategy Goal 1 Strategy Goal 2 Strategy Goal 3 Strategy Goal 4 Strengthened Fiscal and Improved Improved Economic Enhanced Human Capital Public Financial Competitiveness Infrastructure Development and Social Management Protection 1.1 Strengthening Fiscal 1 2.1 Business Environment 3.1 Electricity 4.1 Education Space - Improved business - Improved capacity to - Increase availability of - Better informed fiscal environment implement the education data for policy decisions Government's electricity decision making in sector reform strategy Ministry of Education and Higher Education 1.2 Public Financial 2.2 Access of Finance for 3.2 Water S 4.2 Social Protection and 4 Management SMEs and Women - Increased access to and Social Safety Net - Improved transparency Enterprises reliability of potable water - Improved and control environmient - Improved access to in targeted project areas administration, delivery in public financial finance among SMEs and and financial management Women Entrepreneurs sustainability and targeting of social 1.3 Statistical Capacity i~2.3 Trade and Regional S 3.3Transport services Building Integration - Improved efficiency of - Enhanced capacity of - Improved access by existing urban transport Central Admin. of private sector to trade infrastructure and traffic Statistics to carry out and financing management in the city of analyze key survey Beirut and Greater Beirut Area 2.4 Telecommunications H3.4 Environment and Waste - Improved capacity of Management develop strategy for and - Improved environmental regulate the management telecommunications sector 3.5 Local Development V - Basic services restored and local recovery and development supported Achieved Partially achieved 0 Not achieved 12 45. Notable achievements have been made during the CPS period to strengthen gender awareness and women's participation in society. According to MOSA's National Social Development Strategy, prevalence of poverty is high among female-headed households in Lebanon. The Social Promotion and Protection Project is aiming to target overall 50 percent female beneficiaries out of a total number of direct beneficiaries through grants for income-generating activities and the provision of social services. The New Entrants to Work Program under ESPISP II targets 50 percent of women enrollment for soft skills training, as well as on-the-job training. Furthermore, in collaboration with the Marseille Center for Mediterranean Integration, a regional governance program is being launched focusing on accountability institutions, the justice sector and poverty to work with civil society in providing legal information and counseling to women related to personal status issues (divorce, marriage, alimony, child support, inheritance), and with Family Courts to set up a system of assistance to poor women. The WBG has also increased its outreach to women and women-led enterprises to promote greater economic inclusion of women. For example, IFC provided advice to BLC on launching the "Women Empowerment Initiative", which offers Lebanese women and women-led businesses information, training, and networking opportunities, as well as financial products to achieve commercial success. As part of a broader effort targeting SMEs, IFC assistance included gender-sensitivity training, focus group-based research and products that met the financial needs of women. Elsewhere, IFC is integrating women's empowerment into other projects such as Alternative Dispute Resolution (ADR) and business training. V. THE WAY FORWARD 46. As identified in the CPS, Lebanon's complex political economy makes it difficult to foresee where reforms are most likely to take place. Close policy dialogue, analytical and advisory services, and targeted investments can help inform and build momentum around the reform agenda - but the inherently difficult country context, exogenous economic shocks, and regional political developments that impact Lebanon's political landscape, can suddenly derail or significantly slow down the Government's ability to translate its reform commitments into action. The Country Partnership Strategy Progress Report reconfirms the validity of the two-tiered approach. The first two years of CPS implementation have seen traction in key economic reform areas, but the consensus necessary to implement broad structural reforms has not been developed. Therefore, a Bank engagement that focuses on support through the existing portfolio (in fiscal and financial management, water, transport, and urban development, support to SMEs, social protection, and education), to be complemented by selected operations targeting transformational sectors such as energy, transport and water that show potential for progress, appears appropriate under the present circumstances. The Bank will ensure that gender-sensitive approaches are adopted in the existing portfolio, as well as in the new pipeline for the remaining CPS period. Moreover, the Bank will consider supporting the Government to address the impacts of the Syrian refugee crisis on Lebanese hosting communities, by addressing the developmental implications of the Syrian displacement. 47. The Bank will continue to engage with agents of change in Government and civil society, using its analytical work to promote a strategic approach and to strengthen momentum for reform. These activities will continue to be complemented by active IFC investment and advisory services targeting SMEs, investment climate reform, climate change initiatives, south-south investments, and broadening access to financial services. A particular opportunity exists by extending the Lebanon Trust Fund that would allow the Bank Group to respond further to current economic stresses and uncertainties by scaling up its support to SMEs, benefiting from experience gained previously and by leveraging other donor initiatives. 48. New lending: To date, US$297 million have been committed in IBRD investment loans during the CPS period. Two new projects, totaling US$36.4 million, are expected to be presented for 13 approval in the remainder of FY13, and the indicative lending pipeline for FY14 currently foresees US$168 million IBRD with potential additional lending in FY14-15 of up to US$100 million. This is in line with the upper end of the indicative lending envelope (US$375 - US$550 million) envisaged when the CPS was prepared. For IFC, an additional bank is expected to be added to IFC's Global Trade Finance Program in FY13, while targeted advisory projects related to risk management for a partner bank and corporate governance in the education sector will be completed by fiscal year-end. The FY14 pipeline currently includes 3 equity transactions and an advisory assignment related to sustainable energy finance. 49. The improvement of basic infrastructure services, along with the provision of social services and the establishment of an efficient social protection system, have emerged as Government priorities for Bank support. A social protection project will facilitate access to social development services at the community level and improve the coverage and targeting of the National Poverty Targeting Program. An ICT project will strengthen innovation and entrepreneurship in the Lebanese Mobile Internet Ecosystem7 . A project is under preparation to reduce industrial pollution in industrial enterprises, strengthen Government's monitoring and enforcement capabilities, and establish a financial mechanism for environmental investments (Lebanon Environmental Pollution Abatement Project). A new investment operation in the Agricultural sector will increase the on- farm income of smallholder farmers in remote areas. The new Financial Management Reform 2 project will continue to support MOF's efforts to improve the allocation of public financial resources, enhance the efficiency and transparency of financial management systems, and tighten the control environment. Bank engagement will also continue in the Water sector, where a new investment operation will be considered to increase water supply to the Greater Beirut area to address the causes of water shortages. Given the importance of reforming the Energy sector in terms of fiscal impact and service delivery, the Bank Group will look to deepen its engagement by providing financing to support the Government's reform program and to work with other partners to leverage Government resources. This support could target Liquefied Natural Gas (LNG) development through a possible Partial Risk Guarantee, development of renewable generation and energy efficiency, transmission strengthening or support for enhanced performance of EdL and electricity distribution. In the Transport sector, Government recently inquired about potential Bank support for the new Beirut Peripherique and A2 Highway project serving as a future alternative road for the existing Coastal Highway. 50. Analytical and advisory services will continue to underpin the CPS. Discussions with Government have confirmed the relevance of the World Bank's ongoing Technical Assistance and AAA program, which cuts across the four CPS pillars and informs the policy dialogue around reform, as well as the design of the Bank's program in Lebanon. The TA and AAA support for macroeconomic management, public financial management, business environment reform, structural reforms in electricity and water, education, employment and labor markets, and social safety nets remain a priority. The Bank Group will strive to adapt its analytical work to GoL requirements in terms of addressing the ongoing or new external shocks and crises, and will increase its responsiveness to provide just-in-time technical assistance for specific policy issues. 51. Through the State and Peace-building Fund, the Bank has mobilized US$1.2 million to address some of the immediately apparent development needs in light of the escalating Syrian displacement crisis: (i) US$900,000 has been granted for capacity building and support to local communities hosting Syrians, implemented through Save the Children and other NGOs (the project is expected to be implemented over 18 months and provide direct benefits to hosts, Syrians and several 7 The project includes specific tracking of gender on number of direct beneficiaries, as well as an activity to reinforce women entrepreneurship. 14 local and central institutions); and (ii) an impact assessment to help inform the national policy development process. Table 3: World Bank Program for the period FY11-FY14 Approved Lending Amount (USD AAA Program Million) FY 11 - Greater Beirut Water Supply Project (IL) 200.0 - Broadband Policy for ICT (TA) - Second Education Development Project (IL) 40.0 - Tourism & Growth Potential (TA) - Using Lebanon's Large Capital Inflows to Foster Long-Term Sustainable Growth (ESW) - Country Environmental Analysis (ESW) FY12 - Cultural Heritage Additional Financing (IL) 27.0 - Development of SMEs & Women SMEs (TA) - National Volunteer Service Program (SPBF) 2.0 - Inventory & Removal POPS Materials (TA) - Capacity Building to Implement Key Steps for the 0.13 - Water Sector Strategy (ESW) Statistical Master Plan (TFSCB) - Challenges of informality for women (TA) - Broadband Strategy & Deployment (TA) - Labor Markets & Migration (TA) - Investment Environment Reform (TA) FY13 - Supporting Innovation in SMEs Project (IL) 30.0 - Best fit practices for reforestation to enhance climate - Building CSO Capacity to Provide Legal Aid 0.3 resilience (TA) Services (IDF Grant) - Improve Capacity for Environmental Compliance 0.3 (IDF Grant) - 5M: Displaced People in Lebanon (SPBF) 1.2 Proposed Lending Amount (USD AAA Program Million) IBRD (for approval in May 2013) - Boosting Growth and Social Welfare in a Context of - Social Promotion and Protection Project 30.0 Fiscal Consolidation (ESW) - Mobile Internet Ecosystem Project 6.4 - Measuring Financial Literacy (TA) - Higher Education (TA) - Environmental Pollution Abatement (TA) Proposed Lending Amount (USD AAA Program Million) FY 14 Planned - Env. Pollution Abatement Project (IL) 15.0 Capacity Bldg. to Implement Statistical Master Plan - PCB Management (GEF) 2.54 (TA) - Financial Management Reform 2 (IL) 4.0 - WB Investment climate assessment (ESW) - Water Augmentation Project (IL) 125.0 - Innovation and competitive industries policy - Sustainable Agriculture Livelihoods in Marginal 24.0 framework Areas (SALMA) (IL) - FSAP on Capital Market and Insurance (ESW) - Sustainability in Marginal Areas (GEF) 7.2 FY 14 Potential new Program - Beirut Peripherique and A2 Highway project (IL TBD -Multi-Sectoral Social / Poverty Assessment (ESW) - LNG Development (PRG) TBD VI. RiSKS 52. In 2010, the CPS had emphasized risks related to sectarian interests obstructing the implementation of the economic reform program, Lebanon's dependence on foreign capital inflows, systemic corruption and weak governance, the fragile internal political environment and the tense regional security environment. Unfortunately, the identification of these risks proved to be prophetic. The necessary broad consensus around the reform program could not be built, and the resulting lack of reform implementation and fiscal adjustment perpetuates the country's macro- fiscal fragility. Lebanon's economy remains dependent on foreign capital inflows to absorb the country's large sovereign debt, and sectarian interests continue to constrain political will to address 15 systemic corruption and governance issues. The unforeseen crisis that engulfed Syria as of March 2011 has further compounded these risks contributing to inter-sectarian tensions, leading to incidents of violence across the country and resulting in an influx of displaced persons. The steady stream of Syrians coming to Lebanon having been displaced by the conflict is straining the Government's delivery of essential services in Lebanese host communities and may increase sectarian tensions even further. Divisions within the Cabinet, exacerbated by the coalition's inability to reach agreement on a policy response to the Syrian crisis, along with a stalemate in the executive and legislative branches of the Government, impede the enactment of important bills, regulations and appointments which remain pending. Political and sectarian spill-over effects of the Syrian crisis, especially if prolonged, might turn out to be far reaching. Under these circumstances, the formation of a new Government following the upcoming parliamentary elections will likely take considerable time and effort by Lebanese political forces to negotiate coalition agreements. The delay in elections and its impact on the Government will substantially affect Government's and Parliament's legitimacy and ability to act. As such, this situation is likely to continue to affect successful implementation and performance of the WBG program. 53. Over the remaining period of CPS implementation, the Bank Group's assistance program will be strongly challenged by the complex country environment and related risks. The WBG recognizes that it has only limited tools to mitigate for political risks, and it is closely monitoring the country and macroeconomic environment, as well as regional developments. The Bank will continue to adjust to this situation by taking into account lessons learned in order to mitigate some of the risks affecting the Bank's program: For example, efforts will be made to ensure implementation readiness of all projects before Board approval so that even if there are delays in parliamentary ratification, implementation can be jumpstarted as soon as effectiveness is achieved. In addition, project design can incorporate contingencies to help address additional costs incurred as a result of delays and increased risk premia associated with increased uncertainties in the environment. Beyond these measures, the Bank will engage more broadly with different stakeholders across the political spectrum to ensure a solid understanding of the Bank's work in the country and the objectives of the specific Bank-financed operations. To this end, interactive sessions are being planned with members of Parliament to review and discuss this CPS Progress Report and the proposed pipeline of projects. 54. The displacement of large numbers of Syrians is exacerbating Lebanon's existing socio- economic challenges and is affecting the Bank's portfolio. It is foreseeable for the remaining CPS period that this situation will challenge the strategic goal to "strengthen fiscal and public financial management" as the large-scale influx of Syrians also has a budgetary impact on Lebanon that already struggles with pre-existing fiscal problems. Moreover, the Syrian influx will affect significantly our human development (HD) portfolio related to the provision of services (education, health and social services), in particular in disadvantaged regions. Project development objectives of the HD portfolio may be jeopardized as originally set targets may be difficult to achieve within the originally planned timeframe8. While continuing to support the authorities in improving effective service delivery - as is the case with the proposed Social Promotion and Protection Project - and providing support for prudent public financial management, the Bank team undertook and will continue to seek flexible adjustments to the Bank program where warranted: as such the strategic goals of the CPS as well as the outcomes have been revised. The Bank will also consider retrofitting projects in the existing portfolio to address increased service delivery needs, livelihoods support and safety nets in affected hosting communities. For example, the Education Development Project II, which focuses on expanding early childhood education in disadvantaged areas, will need to adopt a different approach as facilities are being overcrowded with new students or occupied by refugee families. Necessary reforms such as reducing the number of contract teachers (most of whom had lower qualifications) are set back as these new teachers would be retained to cope with additional demands for educational services. 16 ANNEX I: CPS RESULTS MATRIX AND PROGRESS TO DATE Country Development Goals 1.1 Fiscal Space: Debt and debt-servicing burden is reduced 1.2 Public Financial Management: Improve efficiency and quality of Public Expenditure 1.3 Statistical Capacity Building: Increased evidence-based policy making Issues and Obstacles * Fiscal and public debt positions create major risks to macro-fiscal sustainability and prospects for high growth * Absence of a clear macro-framework, budget, MTEF, and alignment between expenditure and planning * Absence of a planning tool for effective resource management * Lack of resources and autonomy of the Central Administration for Statistics (CAS) results in a weak and fragmented statistical system 1. is Space ' Create enabling conditions for 1.1 Better informed fiscal policy decisions Macro-fiscal analysis and modeling A macro-fiscal department within the Budget Ongoing or Complete management of fiscal balance by: function further developed, fully Directorate at MoF was established in March Lending/AAA: operational and periodically updated. 2012 and work is ongoing. Emergency Fiscal * Improving macroeconomic 1.1.1 Macro Fiscal Framework adopted Partially Achieved Management Reform programming and policy analysis BL: No (2010) Project to guide revenue and expenditure Target: Yes (2014) choices and to facilitate integration A High Debt Committee (HDC) has A Debt Committee has been established, as of planning and budgeting been established and the HDC has had well as a Public Debt Directorate at MoF. Usig Lnons Lr functions. its first meeting. HDC will meet in April 2013. Captal InwTo * Publishing and implementing a 1.1.2 A medium-term debt management medium-term debt management strategy developed MOU between MoF and BdL has been MOU between MOF and BdL has been signed. strategy BL: No (2010) agreed. Achieved Boosting Growth and Target: Yes (2014) Social Welfare in a * Establishing formal coordination 1.1.3 Regularity of Cash Monitoring and A Cash management Unit has been set up and Context of Fiscal mechanism between MoF and BdL Reporting is producing daily cash briefs for the Minister. Consolidation (AAA) to improve debt management. BL: Intermittent reporting Achieved Planned Lending/AAA: Target: Daily with increased scope The study on "Using Lebanon's Large Capital Lebanon Financial Inflows to Foster Long-Term Sustainable Management Reform Growth" has been completed and Project 11 disseminated. The study on "Boosting Growth and Social Welfare in a Context of Fiscal Consolidation" is ongoing, and has led to the formulation of policy notes on electricity, telecom, and public sector wages, dealing with key macro-fiscal sustainability and fiscal space constraints. The policy notes are being discussed with GoL counterparts. 17 Budgeta Ppartomroess isie P ucmsMlsoe Pors oDt P ntuet bette aulinnwith government Budget preparation process is 1.2 Improved transparency and control The conceptual fr7amework and While the conceptual framework for an MTEF Ongqjoin rComnpleted better aligned with government environment in public financial implementation plan for the introduction has been developed, the actual MTEF could Lending/AAA: policies and provides stronger basis management of the MTEF has been developed by the not be finalized in the absence of an approved Emergency Fiscal for expenditure control and strategic MoF. budget since 2005. Management Reform resource allocation by: 1.2.] Revision of the budget classiication Partially Achieved approved to bring it in line with GFS 2001 " Introducing a multi-year budget norms and increase transparency Guidelines and basic procedures for In the absence of a budget, efforts have been Planned LendimnYlAAA: planning process (MTEF) BL: No (2010) public investment programming of a refocused on key elements to improve fiscal (baseline: incremental annual Target: Yes (2014) periodicity equal to that of the aggregate transparency and budget management, such as: Lebanon Financial budget planning) by end FY14 MTEF are defined. * TA for the revision of the budget Management Reform 1.2.2 Adoption of accounting procedures classification; Project 11 * Regularizing preparation of the andguidelines * Functional review and documentation of public investment program and BL: No (2010) accounting procedures; synchronizing it with that of the Target: Yes (2014) * Design of commitment controls systems; budget cycle by end FY14 e The revision of the public acconting law, 1.2.3 Introduction of commitment numbers which is ready for Cabinet approval; and and controls * The development of a budget preparation BL: No (2010) Basic procedures for estimation of circular, based on a macro-fiscal framework Target: Yes (2014) recurrent costs are developed, and clear costing norms Budget preparation manual has been revised. Achieved 1an guidn es B Enhanced capacity of Central 1.3 Enhanced capacity of Central Series of trainig programs for survey, CAS completed a household survey with Ongoing or Completed Administration of Statistics (CAS) Administration of Statistics (CAS) data analysis and poverty assessment technical support from the Bank for the Lending/AAA: and clarification of roles and to carry out and analyze key surveys completed. purpose of the National Poverty Targeting TA on Household responsibilities to carry out and Program. Achieved Budget Survey analyze key surveys. 1. 3. 1 Household survey totally carried out On-the job support provided to at least 4 (Completed) by CAS according to international senior technical staff of CAS. Indicator: Household survey and standards. poverty work totally carried out by BL: No (2010) Questionnaire and household budget Capacit Blg CAS according to international Target: Yes (2014) survey designed by CAS Ontoimp Mt the ted Government endorses the Statistical SNIP was presented. All sectors will be (SMP) (AAA) Master Plan (SMP). examined to ensure comprehensive coverage of the statistical system. Partially Achieved. Capaement euildfo public invimpelempntgameyngtofs for the SMP (TFSCB) Review of the statistical legal Not Achieved. Planned Lending/AAA: faamework completed. Poverty Assessment _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _(AAA) 18 Country Development Goals 2.1 Business Environment: Streamline and simplify legal and regulatory framework for business 2.2 Access to Finance for SMEs and Women Entrepreneurs: Increase number of financial tools/schemes available to SMEs and women-owned SMEs and streamline business support services across Lebanon 2.3 Trade and Regional Integration: Minimize trade related restrictions 2.4 Telecommunications: Introduce competition, improve capacity and quality of services, and reduce cost to consumers Issues and Obstacles * Outdated commercial regulations and discretionary bureaucratic application of rules, particularly for SMEs * Outreach of finance and financial guarantees to SMEs (particularly outside Beirut) falls below potential and demand * Business Support Centers (BDCs) do not provide consistent level of support to SMEs across Lebanon (in addressing business regulatory constraints) * Trade finance for private sector firms is limited due to counter-party and country risks * Limited availability of ICT services; low quality of fixed line services; mobile penetration below potential * High prices of telecommunications services and Inictr and Inicator Improvement in some key aspects of 2.1 Improved Business Environment Establishment of inter-miisterial Commission established under Hariri Ongoing orCmpleted the legal and regulatory framework commission and its secretariat for Government, with Office of Prime Minister Lending/AAA: to facilitate company creation, 2.1.1 Days to comply with business monitoring reform process. now acting as Secretariat to lead effort under FSAP on Capital operation, access to credit regulation (number) "Improving the Business Environment in and/or exit (administrative BL: 587 (2011) Lebanon"program, developed with WBG procedures, commercial and Target: 337 (2014) support. Partially Achieved Investment company law, commercial and/or Environment Reform collateral registries, etc.) 2.1.2 Days to settle a case Adoption of Action Plan with World This has been replaced by: "Establishment of (AAA) BL: 721 in courts (2012) Bank Technical Assistance prioritized a Working Group on key private sector Enhanced capacity of public Target: 90 through mediation (2014) list of reform projects. development and innovation priority IFC Advisory Services: administration to implement initiatives led by the PCM Office". - ICT Lebanon business environment reform. 2.1.3 Law on Secured transactions drafted - ADR Lebanon BL: No (2010) - Lebanon SL Target: Yes (2014) Licensing procedures for tourism sector mapped & recommendations formulated (EhC). Project ongoing. Plauned LendinniAAA: Two new mediation centers established under Investment Climate Beimt Chamber of Commerce & Tripoli Bar Assessment (AAA) Association - one case settled (14 days). Wunovation and (BnC). Project ongoing. Competitive Industries Policy Framework Initial draft of Secured Lending Law completed (IFC). Project ongoing. 19 ad of financi Itoolstfor 22AcstoFnnefrSMEs and omen-we SMEs.enur Development of financial tools for 2.2. Improved access to finance among One workshop to increase outreach by Conducted regional workshop to increase Onigqoioropleted SMEs and women-owned SMEs. SMEs and Women Entrepreneurs financial institutions to women-owned outreach to SMEs, including those owned by Lending/AAA: 2.2.]1 Increased Sustainable Energy Finance SMEs women. SME & women's banking program Supporting Innovation Improved delivery of services by (SEF) for Bank Libano Francaise (BLF) underway. SEF project with BLF is in SMEs Project BDCs (such as gender-targeted underway. Achieved workshops) in supporting capacity Development of SMEs of SMEs, particularly in business 2.2.2 Banks assisted to increase lending to A review of BDCs is completed &Women SMEs (TA) management and processing/ women-owned businesses: including a M&E framework to monitor The Government of Lebanon took a clear navigation of regulatory processes. - Assist Banque Libanise pour le Commerce graduting enterprises and women step towards addressing the market gap in Chalnge o (BLC) to grow its SME portffolio with focus entrepreneurs early stage equity financing for SMEs by inoAAi) orWoe on loans to women entrepreneurs sigmng a World Bank Project on Innovation BL: 1260 SME loans disbursed annually, of in SMEs MENA SEF Program which only 7o are for women A comprehensive assessment and a (IFC Advisory entrepreneurs (20]]) M&E frework for financing outreach Services) Target: 1525 SME loans disbursed and tools to SMEs is completed, BLC Bank/SMEWIN annual ly, of which 20%o will be for women identifying underserved areas. (IFC Advisory (2014) Services) 2.2.3 AMEEN microfinance institutions Project CHF TAF (lFC assisted to scale up microinance lending Advisory Services) BL: $11,619,614 (2008) Target: $15,410,000 (2012) l s d u financing improved, trade financing Trade Finance Program (GTFP) with another expected to join Q3 FY13. Lendin/AAA: 2.3.1 Increase in tradefinance volume increases from 3 in 2010 to 6 in 2013. Achieved trade finance volume provided by o iaeAdvisory Services banks to the private sector. BL: $92 million (2010) FY11 & FY12 average volume of trade Target: At least 100 (2014) finance increased 232% over FY1 0. fiania instittionsuoiwome-owne Development of a strategy for 2.4 Improved capacity to develop Assessment of different policy options Technical assessment of actions resulted in Ongoing or Completed reform of the Telecommunications strategy for and regulate the to reform the telecoms sector, with an revisiting of options for sector reform. Lending/AAA: sector with complementary tools to Telecommunication sector eye to managing the resulting fiscal Potential for sector liberalization still open Broadband Policy for manage the fiscal transition, with a 241Alntemsregfreomofhe transition, and establishing a with a technical understanding of fiscal ICT (TA) view to establishing a long term 2..1leomnctem stgfor reeformoted sustainable fiscal base for the sector, impact. Achieved Broadband Strategy sustainale fiscl base fr thecscdor.gTeecommuncationsrector dveloped utBL: No (2010) Satisfactory progress of deliverables and Deployment (TA) Enhanced capacity of the Target: Yes (2014) indicators to date under the IDF grant to Telecommunications Telecommunications Regulatory 2.4.2 TRA regulatory technical capacity build capacity of the TRA. Project ongoing. Regulatory Capacity Authority (TRA). improved as evidenced by adoption of new Building (IDF grant) regulatory approval processes and new Mobile inteet industry project under Plauned LendinAAA: spectrum regulations preparation with Board delivery expected on Mobile Internet BL: No (2010) May 17, 2013. Ecosystem Project Target: Yes (2014) 20 Sta ic Gol Ipoe Econi Infatutr Country Development Goals 3.1 Electricity: Increase supply of reliable electricity and reduce drain on government budget 3.2 Water: Increase reliability of water supply, develop comprehensive water resources management plan 3.3 Transport: Improve efficiency of existing urban transport infrastructure in the Greater Beirut Area 3.4 Environment and Waste Management: Municipal solid waste management 3.5 Local Development: Promote balanced and sustainable territorial development Issues and Obstacles * Poor operational and financial performance of EdL * Outdated and inadequate water resource management strategy and planning * Unreliable and costly electricity services due to insufficient generation capacity * Severe traffic congestion as a result of limited road network capacity * Large subsidies to sector from national budget due to insufficient revenues from tariff * Lack of parking management and shortage of parking spaces * Fragmentation and weak technical, financial and managerial capacity of Regional Water * Limited capacity and poor quality of public transport system services Authorities (RWAs) * Weak legal and institutional framework including lack of defining roles and responsibilities, * Inadequate water and wastewater planning supply, storage, treatment, and distribution poor strategic planning and very modest managerial and technical capacities capacity * Outdated municipal finance framework Orgia CPS Oucoe Reie CPS Oucoe M itoe Prgrs toDaeCP nsrmet Improved operational performance 3.1 Improved capacity to implement the Preparation and approval of a plan for Corporatization plan prepared but broad Ongoing or Complete of EdL. Government's electricity sector reform EdL performance improvement. Government consensus not yet achieved. Lending/AAA: strategy Implementation pending. Indicator: Network losses reduced 3.1.1 Roadmap for EdL Restructuring /Partially Achieved Eecity Sec from a baseline of 37% in 2010. Corporatization finalized and agreed rSe E er BL: No (2010) Improved demand management and Restructuring underway with distribution p cto Target : Yes (2014) distribution network performance operations now under contract to Distribution Capacy through implementation of demand Service Providers. Too early to tell if this 3.1.2 Satisfactory implementation of management and loss reduction will result in improvements in demand Sectoral Policy Paper Sector Program, as evidenced by i) programs (Part of the Government's management, distribution sector performance Sufficient sector reform strategy) in terms of billings and collections, loss budget allocation; ii) commencement of reduction or service provision. Support to procurement of 50% ofprogram projects Partially Achieved Implementation of BL: No (2010) Target : Yes (2014) Expressions of Interest released for E to development of an LNG re-gasification Planned Lending/AAA: 3.1.4 Final Decision to proceed with facility. Project ongoing. development of alternate fuel supply (LNG) Partial Risk Guarantee BL: No (2010) Incorporation of the Lebanese Centre for on LNG (TBD) TargetC: Yes (2014) Energy Conservation (LCEC), and budgetary allocations made to Energy Efficiency Policy Advice on Programs (Part of the Government's sector Natural Resource reform strategy). Project ongoing. Management, including on Governance (e.g. IFC support to EdL's outsourcing to EITI) distribution service providers (DSPs) pending commitment through US$8 million Butec 11 (IFC approved investment. Project ongoing. Investment) 21 Access to and reliability of potable 3.2 Increased access to and reliability of Full-time Managing Director for Beka'a Full-time Managing Director for the BRWA Ongoior opleted water is increased in the Greater potable water in targeted project areas Regional Water Authority (BRWA) has been appointed. Achieved Lending/AAA: Beirut Region. appointed by August 2011. Greater Beirut Water 3.2.]Houseoldsnegallbconnctedaoter Beirut Mount Lebanon Water improved water supply network in the West Business Plan developed by December Business Plan has been developed by GIZ Supply Project Authority (BMLWA) and Beka'a Bekaa and Ba'albeck and neighboring 2011. and has been approved by the BRWA. (ongoing) Regional Water Authority (BRWA) regions Achieved West Beka'a have a strengthened management West Beka'a: BL: 13,589 (2007) Emergency Water capacity. Target: 47,705 (2013) Ba'albeck Water and Wastewater Project Ba'albeck: BL: 15,714 (2001)(water) and (closed): Over 134 kilometers of water SupmplPet Indicators: Additional 250,000 m3/d 18,000 (wastewater) distribution and wastewater collection of potable water is provided to the Target: 73,640 (water) and 29,410 network installed. laat wastewater treatment Ba'albeck Water and Greater Beirut Region by end-2017; (wastewater) (2013) plant operational at design levels. Supply hours during lean season Wastetero increased three-fold by end-2014. 3.2.2 WHO standardsfor water quality met West Beka'a Emergency Water Supply West Beka 'a Project (closed): 194 kilometer of water CutyWtrSco The GoL has a national water Baseline: Nitrates: 100 mg/l .(2007) supply network rehabilitated (over 85 resource management strategy and Coliform: 10/100 ml. (2007) kilometers more than planned at project Assistance Strategy plan. Target:Nitrates:l10 mg/l (2013) appraisal). Pumping stations deliver water (AAA) (completed) Coliform: 1 /100 ml (2013) that meets World Health Organization quality PandLnigAA Indicator: The National Water standards. Sector Strategy has been adopted by 3.2.3 Per capita per day delivery of water Water Augmentation Government. within project area in West Bekaa Ministry of Energy and Water developed a Project Baseline: 60 liters (2007) Watwtrmngmn lnNational Wastewater Sector Strategy which Target: 100 liters (2013) was approved by Parliament in December developed for Beka'a Valley by May 2012 and incorporates wastewater 3.2.4 Volume ofwastewater collected and 2011. management for the Beka'a Valley. The treated (Ba'albeck) Ministry of Environment also finalized the Baseline: 0(2007) Business Plan for Combating Pollution of Target: 5,992m/day (2013) Lake Qaraoun in the Beka'a valley. Achieved. 3.2.5 National Water Sector Strategy finalized and approved by the Parliament Acpalcomrilblngnd Accounting software for the BMLWA, with Baseline: No (20 10) acceptable commercialimbillingeand specifications acceptable to the World Bank, Target: Yes (2013) andount stanrdstimpemented y has been purchased and is operational. by December 2012. Wate resurc mangemnt sudy This milestone is replaced by "GoL National 3W2a2te esou c emen study Water Sector Strategy finalized by Ministry aof Energy and Water." The Ministry of Energy and Water the National Water Sector Strategy which was approved by Parliament :in March 2012. Achieved. 22 EffIicicyorxstn urbanicaor 3Transport fatutr n rfi Efficiency of existing urban 3.3 Improved efficiency of existing urban Traffic Management Organization The Traffic Management Program has been ig t oor Coopfeted transport infr7astructure and traffic trnnsport infrnstructure nnd trafflc (TMO) with Intelligent Transport successfully implemented. Operation of the Lending/AAA: management in the city of Beirut mnagement in Beirut city and GBA System (ITS) capabilities is established, traffic management system including the Urban Transport and Greater Beirut Area is 3.3.] Percentage increase of traffic Traffic Management Center (TMC is Development Project improved. volumes diverted to new efficient urban ongoing. Achieved transport infrastructure The On-street Paid Parking of 730 pay-and- Public Transport Indicators: BL: 0 (2010) Installation of about 580 pay-and- display parking meters has been Strategy (AAA) * Travel time on selected main Target: 25% (2014) display multi-space parking meters; TA implemented. Traffic control lights have urban roads reduced by 25% 3.3.2 Regulated parking spaces in Beirut and training to build capacity for been installed at 200 intersections along with Planned Lending/AAA: (baseline 2010) by end FY14. BL: 6500 (2010) parking management. CCTV cameras connected to the equipped Target:8000 (2014) and operational TMC. Achieved Beirut Peripherique and * Increased regulation of on- 3.3.3 Intersections with traffic lights A Public Transport Strategy to improve A2 Highway project street parking in selected zones BL: 182(2010) (TBD) by end FY14. Transport feasibility studies completed mobility within the GBA (TransBeirut) has Targt: 15 (214)been finalized. The DG of Land Transport 3.3.4 An integrated urban transport and Maritime Transport is considering * Formulation of an integrated strategyfor the Greater Beirut Area options for a public transport system in urban transport strategy for the BL: No (2010) Beimt which could include rail solutions Greater Beirut Area (GBA) Target: Yes (2014) and/or bus solutions. Achieved 3.3 Improveden effcinc ofst existigeurba Sector strategic objectives and 3.4 Improved environmental National MSW Plan with quantitative Partially achieved Ongoing or Completed priority needs are well defined, mngement targets in terms of service delivery and Lendin/AAA: together with a framework and quality prepared and initiated by 2012. - CEA (AAA) implementation arrangements 3.4.1 EJA SEA and environmental Development of an enviromental - Best fit practices for in place. compliance certifi cation system operational compliance certification system. Ongoing. reforestation (AAA) BL: No (2010) - Inventory & Removal Target: Yes (2014) Conducted 5 Green Building Audits. Trained of POPs Matenals 12 local consuhtants to conduct Green - Env. Pollution 3.4.2 GHG emissions reduced (FC Building Audits (WC). Achieved. Abatement TA BL: 0 (2010) - GEF Reg. Gov. & Target: 10,000 metric tons/year (2014) Developed "ARZ" green building rating Knowledge Generation system with 1 building rated through Feb - CP Building Sec. (FC 2013. (IFC). Achieved. Advisory Services) Planned LendinW/AAA: -Improve Capacity for Env. Compliance (IDF) - Env. Pollution Abatement (IL) - PCB Management Project (GEF) - SALMA Project (IBRD) - Sustainability in Marginal Areas (GEF) 23 adIndctr an Indiator Improved transparency and 3.5 Basic services restored and local Use of the standard accounting and Three studies designed to strengthen Ongoior pleted predictability of inter-governmental economic recovery and development financial management practices is municipal finances were developed Lending/AAA: fiscal transfers supported systematized in municipalities. constituting an essential element of the new mumicipal finance framework. First Municipal Indicator: Intergovernmental 3.5.] Infrastructure rebuilt Achieved Infrastructure transfers are settled on a quarterly BL: None (2010): (completed) basis to all municipalities by June Target (2014): Functional Municipal Observatory is The Municipal Observatory has been 2014. i. 18 municipal buildings repaired/ established to collect data on local tax established and is functional. Achieved Cultural Heritage and restored revenues and transfers fr7om central Urban Development Transparency is increased in the ii. 183 road ko repaired/restored goverment. Project (CHUDP) municipal sector due to the iii. 50 retaining wall km repaired/ 3 municipal units operating and managing (ongoing) implementation of a modern M&E restored city core established. Achieved. system. iv. 4,684 street lightingpoles Additional Financing to repaired/restored the CHUDP Historic and cultural assets are v. 13 water drain km repaired/ adequately preserved and managed restored Tourism and Growth with a view to create tourism Potential (TA) revenue opportunities for local 595 new rehabilitation activities in historic communities 3.5.2 Estimated beneficiaries to 5 Increased rehabilitation activities in urban cores in compliance with approved MobiNetS (IFC ARgoaDeeomnMatr historic city centers historic urban cores in compliance with regulations recognizing the centrality of their investment) ABL: (2010) approved regulations recognizing the cultural heritage to their economic and social Plan is adopted by June 20149. i. 325, 000 visitors centrality of their cultural heritage development; 150,000 sq. additional meters ii. 1, 196, 000 residents to their economic and social of pedestrian public squares and spaces development rehabilitated; 182,000 additional sq. meters Target: (2014) facades of historic buildings rehabilitated; 80 i. 375,000 visitors new cafs and restaurants; 642 additional ii. 1, 294, 000 residents, individuals working in cafs and restaurants. Partially achieved 5 new landmark conservation laws approved. Not Applicable as not part of the IBRD Proj ect In FY12, IFC invested US$2m in Tripoli- based ICT firm, now surpassing 100 staff which is more than double pre-IFC staff numbers. Achieved. e A milestone on establishment of Regional Development Board was erroneously included in relation to this outcome, while there is no reference to it in the project documents. 24 Country Development Goals 4.1 Education: Improve quality teaching and learning in general public education 4.2 Social Protection and Social Safety Nets: * Adequate social protection for the elderly, sick, and unemployed * Improve living standards of the poorest and most vulnerable parts of the Lebanese population Issues and Obstacles * Children entering primary public schools are not ready cognitively due to low pre-school enrollment and * The National Social Security Fund (NSSF) is in financial deficit, and the quality low quality pre-school education and efficiency of its services and operations are low * Qualification of teachers is low and there are no incentives to participate in professional development * Labor market policies and programs are not functioning efficiently * Management of the public education system is centralized with limited school level empowerment * Impact of formal social safety net programs on poverty is minimal * Untargeted, weak, fragmented, social safety net programs Imroveda CShOtomeaiess amongPSOtoe Mlsoe Pors oaeCSIntuet firs grdars nd disadvantage 4. Educatio Improved school readiness among 4.1 Increased availability of Education 110 renovated preschool facilities in Implementation under EDP 11 is delayed, as Ongoing or Completed first graders in disadvantaged data for decision making in Ministry of public schools in disadvantaged areas the project has only been declared effective Lending/AAA: communities Education and Higher Education by end-2013. in January 2013. Not achieved. Higher Education TA Indicators: * Number of 3-5 year olds enrolled 4.].] EMIS is used to take decisions Education Development in public preschools in rural and related to the transfer of teachers in all Training of at least 1000 KG teachers in Not achieved Project 11 suburban areas has increased by cycles public schools in new early childhood 10% between 2010 and June BL: No (2010) education curriculum by end-2013. In-time TA on 2014. Target: Yes (2014) "University * 20% improvement in scores of participating schools in ECERS Adoption by Parliament of System of System of Professional Standards for Govre (Early Childhood Environment Professional Standards for Teachers. Teachers has not yet been approved by Rating Scale) by June 2014. Parliament. Not achieved Second Emergency Public School teachers have Social Protection upgraded skills and performance 20% of schools with school Implementation levels to meet national objectives. improvement plans approved and under Not achieved Support Project Indicator: 40% of teachers have implementation received certification under the new Measurin Financial Teacher Career and Professional 16 Lebanese universities have participated in g Development Framework the university governance screening card by June 2014. Public Schools are exercise National report was presented and empowered to plan and manage their discussed. improvement and development. Indicator: At least 30% of schools The QBS is: a) in place and operational; b) with active School Councils by June providing increased levels of transparency in 2014. Informing the policy dialogue student learning assessment. on quality assurance in the sector, and getting all higher education Results from the analysis of international institutions engaged in the process. learning assessment studies are being used to guide quality enhancement initiatives 25 Id and admi t dli and finacial sustetinblt andcaaeyNt Improved administration, delivery 4.2 Improved administration, delivery NSSF Board approves plan for Dropped. i light of the fact that the planned Ongig or Completed and financial sustainability and and financial sustainability and targeting equilibration of Maternity and Sickness reforms in the National Social Security Fund Lending/AAA: targeting of social services through of social Fund. (NSSF) were not progressing, the Emergency Social implementation of new systems and services Goverment requested the Bank to drop Protection adoption of new policies in the activities related to NSSF reforms, and NSSF, MoL, MoPH, MoSA, PCM, 4.2.] Increased percentage of hospital reallocate to MOL reforms. Impemet and MEHE. admissions according to Admission Suppo et 2 Criteria Standards by medical controllers Government annually reduces its arrears Dropped. (CmonnA2-eat Indicators: BL: 0 (2010) with NSSF. * Reduction in annual deficits of Lebanon MILES the Maternity and Sickness 4.2.2 Youth that have successfully Framework for active labor market Not Achieved. New Entrants to Work Programmatic TA Fund and the Family completed a 75 hour training on life skills, policies and programs adopted by (NEW) program with the objective to Allowance Fund by June 2014. coaching andplacement training under Ministry of Labor increase the employability of first-time ESPISP 11 (Component * An in-patient electronic NEWprogram job seekers in Lebanon, approved by Decree I) National Volunteer claiming system (NAPS) BL: 0 (2013) by the Cabinet in December2011 and a 2- Service Program (SPF) Target: 650 (2014) year budget allocated. NEW was officially National Poverty * Is operating in all hospitals of which 500 women launched in September 2012 under the Targeting Program nationwide. auspices of the Prime Ministry. The program is expected to start implementation by March (NT)TA Facilitate employment through 4.2.3 People registered in the National 2013. Labor Markets & effective active labor market Poverty Targeting Program (NPTP) policies and programs, such as database Establishment of a database on poor and The NPTP has been adopted and used by the development of more efficient BL: 62,000 (2012) vulnerable populations using proxy- Government to target social assistance to the National Volunteer employment services (public or Target: 90,000 (2014) means testing targeting mechanism, extreme poor. Achieved Service Program private). Indicator: Necessary systems and Nation-wide public relations campaign Achieved Planned LendingAAA: regulation needed for the effective 4.2.4 Targeted persons in Hermel- on the NPTP implemented. Social Promotion and operation of employment offices in Ba 'albeck reporting an increased Protection Project the private sector in place. understanding of administrative and udicial proceedings to obtain ID An IDF Program is planned to support Syrian Displaced The National Poverty Targeting documents, marriage and birth targeted poor youth and women, mukhtars People in Lebanon Program (NPTP) for social safety certiicates(number) and legal apprentices in Hermel-Ba'albeck (SPBF) nets is implemented, operational and BL: 0 (2013) developed by CSOs to educate poor persons in full use, based on a targeting Target: 500 (2014) on how to represent themselves in IDF Grant for Building mechanism that uses transparent and administrative and judicial proceedings to CSO Capacity to scientific criteria that assess obtain ID documents and marriage and birth Provide Legal Aid households' eligibility. certificates. Services Multi-Sectoral Social Poverty Assessment _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _(AAA) 26 ANNEX II DETAILED OVERVIEW ON PROGRESS TO DATE UNDER THE VARIOUS SECTORS Some institutional reforms have progressed with strong World Bank TA and AAA support * Public Financial Management has been strengthened with the establishment in 2012 of a macro-fiscal department within the Budget Directorate at the MoF, and the development of the conceptual framework for a multi-year budget planning process (MTEF), but the actual MTEF could not be finalized in the absence of an approved budget since 2005. Efforts have therefore been refocused on key elements to improve fiscal transparency and budget management, including the revision of the budget classification to bring it in line with GFS 2001 norms; the revision of the public accounting law; the development of a budget preparation circular, which is now based on a macro-fiscal framework and clear costing norms; the adoption of accounting procedures and guidelines, and the introduction of commitment controls and payment forecasting to avoid over-commitments and improve cash management. In addition, reforms in the debt management area have moved forward with the establishment of a new Public Debt Directorate that assumed both analytical and operational functions. In this regard, the Directorate has engaged on: (i) the formulation of a new medium-term debt management strategy that aims to inform senior policymakers of the high debt committee on cost-risk parameters and scenarios for managing the debt in Lebanon; and (ii) the installation of DEMFAS 6 as to gradually assume the recording and operational functions of debt issuances. * Statistical Capacity Building. The World Bank provided Technical Assistance to the Central Administration for Statistics (CAS) on developing statistical technical capacity in poverty monitoring, through poverty analysis and social statistics (TAPS), and the design of a Household Budget Survey. Funding to the Government in revising the Statistical Law and designing an implementation plan for the Statistical Master Plan is ongoing. * Business Environment. A Bank Development Grant Facility (DGF) regional partnership program is ongoing in partnership with two leading regional incubators/accelerators to build the capacity and technological skills of nascent entrepreneurs to start a business and make it grow. This program, in which Lebanon participates, complements Bank private sector development and financing operations in the region by providing strategic technical support such as skills training, mentorship and networking, to create and build a critical mass of dynamic start-ups able to benefit from Bank and other financing projects. In addition, the regional DGF program will also include tools and materials that can have broader outreach and foster inclusion. The aim is to bolster lasting cultural change in support of entrepreneurship and promote a sustainable entrepreneurial ecosystem in the Middle East. A monthly Arabic entrepreneurship and early- stage investment newsletter will be produced in both print and online forms as well as Arabic videos and TV skits featuring success stories, forums, educational articles, competitions and entrepreneurship news and events. Success stories will feature successful female entrepreneurs and diaspora entrepreneurs spotlighting those who are giving back to the region. * Infrastructure: In the Water sector, the technical, financial and managerial capacity of the Beka'a Regional Water Establishment (BRWE) and the Beirut Mount Lebanon Water Establishment (BMLWE) was strengthened through the appointment of the Managing Director for the BRWE and the development of a business plan, as well as the implementation of several important utility strengthening activities within the BMLWE. Moving forward, the Greater Beirut Water Supply Project will continue to support utility strengthening of the BMLWE in general, as 27 well as the implementation of the Ministry of Energy and Water's National Water Sector Strategy more broadly. Urban Transport and traffic management is being reformed through the implementation of a new Traffic Management program and the operation of a traffic management system, which has seen the establishment of a Traffic Management Center. Within the framework of a new Public Transport Strategy, GoL is now launching the procurement for the design of infrastructure, operational planning and contract preparation for the priority lines of a Bus Rapid Transit system in the Greater Beirut Area, and is preparing the restructuring plan for the Railway and Public Transport Authority. Although a roadmap for reform of EdL was developed in the Electricity sector, which calls for its corporatization in accordance with commercial principles, and builds its management capacity, this roadmap has still not garnered political consensus and its implementation remains uncertain. To improve management capacity of the Municipal sector at the central Government level, a Municipal Observatory was established which is collecting data on local tax revenues and transfers from central Government. Human Development: Following the establishment of a database on the poor and vulnerable population using the proxy-means testing (PMT) targeting mechanism - which was supported financially and technically by the World Bank through the Second Emergency Social Protection Implementation Support Project and Bank technical assistance - the impact, efficiency and effectiveness of Lebanon's social safety nets is being improved through the implementation of a National Poverty Targeting Program (NPTP), which is now fully operational. For the first time in its modern history, Lebanon today has a program whose sole objective is poverty reduction and which has already reached thousands of Lebanese households through the distribution of education and health benefits. The GoL intends to add electricity benefits to the program as well. The program can be scaled up in times of economic difficulties acting like a true safety net program and helping to build Lebanon's resilience to shocks. More importantly, the NPTP is based on a transparent targeting methodology which only uses poverty (welfare) as the criterion for eligibility (not confessional or political affiliation). Through the NPTP, institutional capacity has been built in the Ministry of Social Affairs and the Prime Ministry. Policy dialogue on reform informed by the Bank's knowledge services and Technical Assistance * Bank Technical Assistance (TA) and analytical and advisory services underpinned new investments, and have been instrumental in helping the Government advance on reforms. Bank TA on public financial management helped GoL improve the budget preparation process and its comprehensiveness, by strengthening the integration of the current and capital budget, placing the annual budget in a multi-year perspective, and strengthening budget execution with a focus on the treasury management function. A study on Lebanon 's Capital Inflows helped analyze the nature and drivers of these inflows, interactions with monetary and fiscal policies, and the extent to which they can foster sustainable, broad-based growth in Lebanon. Another study on Boosting Growth and Social Welfare in a Context of Fiscal Consolidation is focusing on macro-fiscal sustainability and improving fiscal space. Several policy notes on electricity, telecommunications, and public sector wages are helping to address the key macro-fiscal sustainability and fiscal space constraints. * Procurement Law. Despite the Procurement Law not being yet adopted, there has been some engagement including having active participation of teams from various Lebanese stakeholders in Regional Conferences on Governance and Regional Public Procurement Reform Efforts (Amman; July 2012), and Improving the Results of Public Procurement through Transparency, Stakeholder Promotion and Capacity Building (Tunis; December 2012). Following these conferences, a round table discussion on Procurement Reform in Lebanon took place in March 2013 to discuss with relevant stakeholders the ongoing reforms in the national public 28 procurement system, the challenges faced in implementing the reforms, and how the Bank can provide support in the short and long term. In the Electricity sector, the World Bank provided close support to MoEW in the development of its Policy Paper on the Electricity Sector, through the Emergency Power Sector Reform Capacity Reinforcement Project, and additional studies on LNG supply and fuel conversion. Several Bank-executed technical assistance activities were also provided for the development of an Energy Efficiency Framework, an action plan for promoting energy efficiency measures in Lebanon, and for the development of a wind power market in Lebanon. To support the Government in the identification of policy options to reform the Telecommunications sector while addressing their fiscal impact, the Bank provided substantive advice in the development of the Telecommunication Sector Strategy, including TA on Broadband Strategy and Deployment, and financed capacity building to the Telecommunications Regulatory Authority. In the Water sector, the Bank played an active role in supporting the development and implementation of the Government's strategy for improving the sector's performance, through TA in the development of a National Water Sector Strategy and the development of its own World Bank Country Water Sector Assistance Strategy. Technical assistance and analytical and advisory services to the Ministry of Public Works and Transport were instrumental in supporting the finalization of GoL's public transport strategy to improve mobility within the Greater Beirut Area, through the development of an integrated public transport system plan ("TransBeirut"). In the Environment sector, the World Bank partnered with the GoL in the preparation of a Country Environmental Analysis (CEA, June 2011), which aimed at providing the analytical underpinning for integrating environment into the development process. One of the main recommendations of the CEA was "Managing Environmental Risks", to assist the GoL in reducing environmental threats due to pollution and natural resources degradation, and adapt to potential environmental perils due to climate change. In July 2011, the GoL issued its Ministerial Declaration which included "Managing Environmental Risks" as one of its priorities. The CEA also included a study on municipal solid waste, as well as a set of options to upgrade municipal solid waste management systems. A recently approved IDF grant for Environmental Compliance will help improve environmental compliance in the industrial sector (particularly in small and medium enterprises) in Lebanon. * In the Education sector, the Bank's support to the development of a National Education Sector Strategy in 2010 through the first Education Development Project (EDP I), and institution building of the Ministry of Education and Higher Education (MEHE), resulted in the adoption of policies and programs focusing on early childhood development and teacher professional development, which are supported through the recently effective Second Education Development Project. As a result of persistent and consistent capacity building, the MEHE today is leading a large and comprehensive, multi-donor supported education reform program. The Bank also supported MEHE in analysis of the financial sustainability of its private teachers' pension fund. In the area of higher education, the World Bank has provided in-time TA to MEHE focused on university governance. 16 Lebanese universities have participated in the university governance screening card exercise leading to two workshops where a national report was presented and discussed. This work is not just informing the policy dialogue on quality assurance in the sector but also helping MEHE in getting all higher education institutions engaged in the process. * Bank assistance was instrumental in helping GoL advance the social security, health insurance and safety net agenda through TA support to the establishment of the NPTP, support to modernization of the social insurance system, coupled with TA for drafting of new pension law; and support to improving efficiency of Ministry of Public Health expenditures through creation 29 of a utilization management function and a modern hospital contracting system based on performance indicators. * A multi-year technical cooperation program on labor markets entitled "MILES" (Macroeconomy, Investment Climate, Labor, Education, Social Protection) assisted the GoL in identifying constraints to the creation of quality jobs, presenting policy options in the areas of social insurance and labor market programs and simulating their macroeconomic and labor market impacts. The MILES program has resulted in the identification of an innovative active labor market program for first-time job seekers (the New Entrants to Work Program) which aims to address both demand and supply side constraints in the Lebanese labor market and, therefore increase the employability of Lebanese school and university graduates. The MILES program also resulted in the modeling of the Lebanese economy through the development of a Computable General Equilibrium Model, which is being employed by the Government to simulate the impact of proposed social policies such as increases in wages and salaries on growth, investment, and employment levels. Finally, the Bank's programmatic TA in pension reform has resulted in a revised proposal for private worker's pension, which is expected to be submitted to Cabinet and Parliament in the coming months. * A grant has just been approved to build capacity of civil society in the Ba'albeck-Hermel area to provide legal information, advice and counseling to poor communities in relation to securing IDs and personal documents (birth and marriage certificates), thereby ensuring that the poor communities affected will not be excluded from social benefits (health, education), employment and political participation (voting). The program will also develop capacity of local officials to advise poor persons on the proper procedures, and simplify procedures to ensure easier access. IFC's Program The IFC significantly scaled up its advisory services activities. Aiming to increase access to finance, particularly for SMES, IFC is advising a major local bank - Banque Libanaise Pour Le Commerce (BLC) - to establish a comprehensive offering targeting women and women-owned firms. This is part of a holistic project that looks to increase the bank's outreach to SMEs in general and improve its risk management practices. IFC is facilitating a South-South sharing of knowledge between BLC and other banks in the region. In addition, IFC is working with another major Lebanese bank - Banque Libano-Francaise (BLF) - to scale up its financing of sustainable energy projects (i.e., those related to energy efficiency, renewables and cleaner production) to reduce greenhouse gases and lessen the impact on the environment. Likewise, IFC also helped the Lebanese Green Building Council to develop the green building rating system "ARZ", and conducted five green building assessments in cooperation with local consulting firms to build capacity in the field. To improve the investment climate, the Bank Group assisted the Government to develop its "Improving the Business Environment in Lebanon" program, which is led by the Office of the Presidency of the Council of Ministers as Secretariat. In this context, IFC launched a project to simplify procedures for licensing in the tourism sector, which is currently under implementation. Working with the Tripoli Bar Association and the Chamber of Commerce and Industry of Beirut, IFC is developing local capacity to offer mediation as a means to resolve business disputes, including the training of local mediators and institutional capacity building for the mediation centers. Projects to improve the commercial registry, strengthen the bankruptcy and insolvency regime, and draft a modern law on secured transactions (which allows for greater use of movable property as collateral) were signed with the Office of the Presidency of the Council of Ministers, with the draft secured transactions law currently being finalized. The IFC and the Bank are working together to assess the national payment system, under a project with the Central Bank of Lebanon. 30 Selected Results of the CPS Water Sector * Over 134 km of water distribution and wastewater collection network installed and about 194 km of water supply network rehabilitated with all pumping stations meeting World Health Organization quality standards * Over 134 km of water distribution and wastewater collection network installed Municipal and Cultural Heritaze Sector * Reconstruction of public infrastructure (17 municipal buildings, 175 km of roads rehabilitated and repaired, 4,684 streetlight poles erected, 48.7 km of retaining walls built * 595 new rehabilitation activities in historic urban cores in compliance with approved regulations, 150,000 sq meters of pedestrian public squares and spaces rehabilitated, 182 000 sq meters facades of historic buildings rehabilitated, 80 new caf6s and restaurants, 642 additional individuals employed in caf6s and restaurants, leading to 10% increase in private sector investments in tourism and heritage sector * 5 new landmark conservation laws approved, 3 municipal units operating and managing city core established * 10% increase in private sector investments in tourism and heritage sector Social Protection (National Poverty Tarzetinm Prozram - NPTP) * 275,000 individuals in NPTP Database today with 80,000 individuals beneficiaries in the first round Private Sector * Increased number of banks participating in IFC's Global Trade Finance Program from 4 to 6, with total of $676 million of guarantees issued 31 ANNEX A2: LEBANON AT A GLANCE Lebanon at a glance 3/5/13 M.East Upper Key Development Indicators & North middle Lebanon Africa income Age distribution, 2010 (2011) Male Female Population, mid-year (millions) 4.3 331 2,452 75-7 Surface area (thousand sq. km) 10 8,775 59,328 Population growth (%) 0.7 1.7 0.7 60-64 Urban population (%oftotal population) 89 58 57 45-49 GNI(Atlas method, US$ billions) 39.2 1,283 14,429 GNI percapita (Atlas method, US$) 9,200 3,874 5,884 15-19 GNI percapita (PPP, international $) 14,090 8,068 9,970 0-4 01 10 5 0 5 10 GDP growth (%) 3.0 4.3 7.8 percent of total population GDP per capita growth (%) 2.3 2.5 7.1 (most recent estimate, 2005-2011) Poverty headcount ratio at $1.25 a day (PPP, %) .. 3 Poverty headcount ratio at $2.00 a day(PPP, %) 14 Under-5 mortality rate (per 1,000) Life expectancy at birth (years) .. 72 73 Infant mortality (per 1,000 live births) .. 27 17 80 Child malnutrition (%of children under 5) .. 8 3 70 60 - Adult literacy, male (%of ages 15 and older) 93 82 96 so Adult literacy, female (%of ages 15 and older) 86 66 91 40 Gross primary enrollment, jmale (%of age group) 10 10 111 30 Gross primary enrollment, male (%of age group) 15 16 il 30 Grossprimaryenrollment,female(%ofagegroup) 99 98 111 10 Access to an improved water source (%of population) .. 89 93 iwo 1ws 200 20 Access to improved sanitation facilities (%of population) .. 88 73 D Leb.on 0didle &aNoIthNri. Net Aid Flows 1980 1990 2000 2011 a (US$ millions) Net ODA and official aid 298 286 200 449 Growth of GDP and GDP per capita (%) Top 3 donors (in 2010): United States 3 12 32 84 so France 16 26 31 60 40- European Union Institutions 5 29 36 53 30 Aid (%of GNI) .. 2.6 1.1 1.2 20 Aid per capita (US$) 114 90 53 106 10 Long-Term Economic Trends -10 95 05 Consumer prices (annual %change) .. -99.7 -0.8 5.7 GDP implicit deflator(annual %change) .. 97.4 -2.1 4.9 Exchange rate (annual average, local per US$) .. 695.1 1,507.5 1,507.5 Terms of trade index (2000 = 100) .. 91 100 79 1980-90 1990-2000 2000-11 (average annual growth %) Population,mid-year(millions) 2.6 3.2 3.8 4.3 1.9 1.7 1.1 GDP (US$ millions) .. 4,690 17,260 40,094 .. 8.8 5.0 (%ofGDP) Agriculture .. 7.3 7.1 5.9 .. 7.0 0.9 Industry .. 25.5 22.8 20.6 .. 5.2 5.1 Manufacturing .. 14.4 13.0 8.2 .. 6.4 1.2 Services .. 67.2 70.1 73.5 .. 6.4 5.0 Householdfinalconsumptionexpenditure .. 124.5 84.1 74.1 .. 8.0 3.8 General gov't final consumption expenditure .. 14.0 17.3 13.8 .. 14.7 3.3 Gross capital formation .. 29.3 20.4 29.8 .. 9.9 10.4 Exports of goods and services .. 12.5 14.2 32.2 .. 24.1 9.6 Imports of goods and services .. 79.9 35.9 50.0 .. 11.8 7.2 Gross savings .. -10.5 -1.2 17.7 Note: Figures in italics are for years other than those specified. 2011data are preliminary. .. indicates data are not available. a.Aid data are for2010. Development Economics, Development Data Group (DECDG). 32 Lebanon Balance of Payments and Trade 2000 2011 Governance indicators, 2000 and 2010 (US$ millions) Total merchandise exports (fob) 1,050 5,318 Total merchandise imports (cif) 5,988 20,158 Voice and accountablity Net trade in goods and services -3,774 -7,116 Politkcal stability and absence ofviolence Current account balance -3,754 -4,866 asa%of GDP -21.7 -12.1 Regulatory quality Workers' remittances and Rule of law compensation of employees (receipts) 2,544 7,558 Control of corruption Reserves, including gold 8,273 45,216 0 25 50 75 10O Central Government Finance 22oCountrs percentle rank (-100) higher values irrply better ratngs (%oofGDP) Current revenue (including grants) 18.6 23.5 source: worldwide Governance Indicator (www.govindicator.org) Tax revenue 14.6 18.5 Current expenditure 38.9 28.0 Technology and Infrastructure 2000 2010 Overall surplus/deficit -23.4 -6.4 Paved roads (%of total) 84.9 Highest marginal tax rate (%) Fixed line and mobile phone Individual .. .. subscribers (per 10 people) 35 89 Corporate .. .. High technology exports (%of manufactured exports) 2.3 12.8 External Debt and Resource Flows Environment (US$ millions) Total debt outstanding and disbursed 29,137 87,493 Agricultural land (%of land area) 58 67 Total debt service 812 1,084 Forest area (%of land area) Debt relief (HIPC, M DRI) - - Terrestrial protected areas (%of land area) 0.5 0.5 Total debt (%of GDP) 168.8 218.2 Freshwater resources per capita (cu. meters) 1,241 1,144 Total debt service (%of exports) 29.4 6.3 Freshwater withdrawal (billion cubic meters) Foreign direct investment (net inflows) ..C02 emissions per capita (mt) 4.1 4.1 Portfolio equity(net inflows) GDP per unit of energyuse (2005 PPP $ per kg of oil equivalent) 6.6 7.5 Composition of total external debt, 2011 thermrulti Energy use per capita (kg of oil equivalent) 1,311 1,580 Kd d27 irleBt8t9710S World Bank Group portfolio 2000 2010 (US$ millions) IBRD Total debt outstanding and disbursed 311 411 Disbursements 42 24 Principal repayments 17 20 76,2 1 Interest payments 14 4 US$ millions IDA Total debt outstanding and disbursed - 0 Disbursements 0 0 Private Sector Development 2000 2011 Totaldebtservice - 0 Time required to start a business (days) - 9 IFC (fiscalyear) Cost to start a business (%of GN I per capita) - 75.0 Total disbursed and outstanding portfolio 218 194 Time required to register property (days) - 25 of which IFC own account 127 194 Disbursements for IFC own account 20 100 Ranked as a major constraint to business 2000 2010 Portfolio sales, prepayments and (%of managers surveyed who agreed) repayments for IFC own account 25 1) Access to/cost of financing .. 16.5 Electricity .. 12.5 M IGA Gross exposure - - Stock market capitalization (%of GDP) 9.2 33.9 Newguarantees - - Bank capital to asset ratio (%) 6.4 7.3 Note: Figures in italics are for years other than those specified. 2011data are preliminary. 3/513 .. indicates data are not available. - indicates observation is not applicable. Development Economics, Development Data Group (DECDG). 33 Millennium Development Goals Lebanon With selected targets to achieve between 1990 and 2015 (estimate closest to date shown, -- 2 years) Lebanon Goal 1: halve the rates for extreme poverty and malnutrition 1990 1995 2000 2010 Poverty headcount ratio at $125 a day (PPP,%ofpopulation) Poverty headcount ratio at national poverty line(%of population) Share of income or consumption to the poorest qunitile (%) Prevalence of malnutrition (%of children under 5) 3.0 Goal 2: ensure that children are able to complete primary schooling Primaryschool enrollment (net,%) .. 76 90 Primarycompletion rate (%of relevant age group) 83 102 87 Secondaryschool enrollment (gross,%) 61 66 77 81 Youth literacyrate (%ofpeopleages 15-24) Goal 3: eliminate gender disparity in education and empower women Ratio ofgirls to boys in primaryand secondary education (%) Women employed inthe nonagricultural sector (%of nonagricultural employment) Proportion of seats held bywomen in national parliament (%) Goal 4: reduce under-5 mortality by two-thirds Under-5 mortality rate (per 1,000) 37 34 32 Infant mortality rate (per 1,000 live births) 32 30 28 Measles immunization (proportion of one-yearolds immunized,%) 61 85 90 Goal 5: reduce maternal mortality by three-fourths Maternal mortality ratio (modeled estimate, per 100,000 live births) 150... Births attended by skilled health staff (%of total) .. 89 Contraceptive prevalence (%of women ages 15-49) Goal 6: halt and begin to reverse the spread of HIVIAIDS and other major diseases Prevalence of HIV (%of population ages 15-49) 0.1 0.1 0.2 0.1 Incidence of tuberculosis (per 100,000 people) Tuberculosis case detection rate (%, all forms) 91 91 91 71 Goal 7: halve the proportion of people without sustainable access to basic needs Access to an improved water source (%of population) .. .. 100 Access to improved sanitation facilities (%of population) .. Forest area (%of land area) Terrestrial protected areas (%of land area) 0.5 0.5 0.5 0.5 C02 emissions (metric tons per capita) 3.1 3.9 4.1 4.1 GDP per unit of energy use (constant 2005 PPP $ per kg of oil equivalent) 8.7 6.8 6.6 7.5 Goal 8: develop a global partnership for development Telephone mainlines (per 100 people) 13.4 13.0 15.4 21.0 Mobile phone subscribers (per 100 people) 0.0 3.5 19.9 68.0 Internet users (per 100 people) 0.0 0.1 8.0 31.0 Computer users (per 100 people) Education indicators (%) Measles immunization (% of 1-year ICT indicators (per 100 people) olds) 10 100 100 -i - 90 75-- 80 75 70 50.- 60- 50 50 255 40 0- 25 2 2000 2005 2010 10 1990 15 2000 2010 2000 2005 2010 Ram fgrls by inpiay& comryduaon ) Leb-o 0Middle. ANothMIm OF-ed+mo.ulesus.iber Mintemetu. rs Note: Figures in italics are for years other than those specified. ..indicates data are not available. 3/5/13 Development Economics, Development Data Group (DECDG). 34 ANNEX B2: SELECTED INDICATORS OF BANK PORTFOLIO PERFORMANCE & MANAGEMENT As of March 31, 2013 Indicator 2010 2011 2012 2013 Portfolio Assessment Number of Projects Under Implementation a 9 10 11 9 Average Implementation Period (years) b 4.6 4.6 5.0 5.0 Percent of Problem Projects by Number a, c 25.0 30.0 28.6 33.3 Percent of Problem Projects by Amount a, c 4.1 10.7 10.3 51.4 Percent of Projects at Risk by Number a, d 50.0 50.0 71.4 50.0 Percent of Projects at Risk by Amount a, d 31.9 17.7 56.9 52.2 Disbursement Ratio (%) e 14.9 43.7 9.6 3.5 Portfolio Management CPPR during the year (yes/no) No No No No Supervision Resources (total US$) 980 1031 1137 1037 Average Supervision (US$/project) 109 103 103 115 Memorandum Item Since FY80 Last Five FYs Proj Eval by OED by Number 18 2 Proj Eval by OED by Amt (US$ millions) 781.0 117.9 % of OED Projects Rated U or HU by Number 50.0 50.0 % of OED Projects Rated U or HU by Amt 35.1 36.1 a. As shown in the Annual Report on Portfolio Performance (except for current FY). b. A\erage age of projects in the Bank's country portfolio. c. Percent of projects rated U or HU on de\elopment objectives (DO) and/or implementation progress (IP). d. As defined under the Portfolio Improvement Program. e. Ratio of disbursements during the year to the undisbursed balance of the Bank's portfolio at the beginning of the year: Inmestment projects only. * All indicators are for projects acti\e in the Portfolio, with the exception of Disbursement Ratio, which includes all acti\e projects as well as projects which exited during the fiscal year. 35 ANNEX B3: IFC INVESTMENT OPERATIONS PROGRAM FY11 FY12 1HFY13 Commitments (US$m) Gross IFC Own Account (OA) 88.8 370.5 220.5 IFC Own Account + Net** Mobilization 88.8 370.5 220.5 OA Commitments by Sector (%) Financial markets (trade finance) 98% 100% 99% Telecommunications 2% - 10% Total 100% 100% 100% OA Commitments by Investment Instrument (%) Equity 2% - - Guarantee 98% 100% 99% Loan - - 1% Total 100% 100% 100% 36 ANNEX B5: SOCIAL INDICATORS Latest single year Same region/income group M. East Upper- & North middle- 1980-85 1990-95 2005-11 Africa income POPULATION Total population, mid-year (millions) 2.9 3.5 4.3 331.3 2,452.1 Growth rate (% annual average for period) 1.7 1.9 1.0 1.7 0.7 Urban population (% of population) 79.4 85.0 89.3 58.0 57.4 Total fertility rate (births per woman) 3.6 2.7 .. 2.7 1.8 POVERTY (% of population) National headcount index Urban headcount index Rural headcount index INCOME GNI per capita (US$) .. 3,200 9,200 3,874 5,884 Consumer price index (2005=100) 175 89 143 131 127 INCOMEICONSUMPTION DISTRIBUTION Gini index Low est quintile (% of income or consumption) Highest quintile (% of income or consumption) SOCIAL INDICATORS Public expenditure Health (% of GDP) .. .. .. 3.0 3.0 Education (% of GNI) .. 2.6 .. 4.8 4.8 Net primary school enrollment rate (% of age group) Total .. .. .. 90 94 Male .. .. .. 92 93 Female .. .. .. 88 95 Access to an improved water source (% of population) Total .. .. .. 89 93 Urban .. .. .. 94 98 Rural .. .. .. 81 86 Immunization rate (% of children ages 12-23 months) Measles 23 85 .. 88 96 DPT 17 93 .. 89 96 Child malnutrition (% under 5 years) .. .. .. 8 3 Life expectancy at birth (years) Total 66 69 .. 72 73 Male 64 68 .. 70 71 Female 68 71 .. 74 75 Mortality Infant (per 1,000 live births) 38 30 .. 27 17 Under 5 (per 1,000 live births) 44 34 .. 34 20 Adult (15-59) Male (per 1,000 population) 241 210 .. 160 161 Female (per 1,000 population) 181 150 .. 95 100 Maternal (per 100,000 live births) .. .. .. 88 60 Births attended by skilled health staff (%) .. .. .. 81 98 CAS Annex B5. This table w as produced from the CMU LDB system. 03/05/13 Note: 0 or 0.0 means zero or less than half the unit show n. Net enrollment rate: break in series betw een 1997 and 1998 due to change from ISCED76 to ISCED97. Immunization: refers to children ages 12-23 months w ho received vaccinations before one year of age or at any time before the survey. 37 ANNEX B6: KEY ECONOMIC INDICATORS Actual Estimte Projected Tndicator 2007 2008 2009 2010 2011 2012 2013 2014 2015 National accounts (as % of GDP) Gross domestic producta 100 100 100 100 100 100 100 100 100 Agriculture 7 7 6 6 6 6 6 6 6 Industry 22 22 23 23 21 20 20 21 21 Services 71 71 70 71 74 73 73 73 73 Total Consumption 97 99 93 94 88 91 90 89 89 Gross domestic fixed investment 27 29 33 34 29 28 29 30 30 Government investment 3 2 2 2 2 2 3 4 4 Private investment 24 27 31 32 26 26 26 27 26 Exports (GNFSb 23 24 21 22 32 29 29 29 30 Imports (GNFS) 48 53 48 50 50 49 49 50 50 Gross domestic savings 3 1 7 6 12 9 10 11 11 Gross nationalsavingsc 17 11 12 12 18 15 14 15 14 Memorandum items Gross domestic product 25057 30080 34651 37124 40094 42945 46050 49568 52887 (US$ million at current prices) GNI per capita (US$, Atlas method) 6330 7020 7920 8740 9200 9490 10090 10780 11360 Real annual growth rates (%, calculated from 02 prices) Gross domestic product at market prices 7.5 9.3 8.5 7.0 3.0 1.4 2.3 4.0 3.8 Gross Domestic Income 6.8 8.7 11.4 5.5 13.9 0.6 2.3 4.0 3.9 Real annual per capita growth rates (%, calculated from 02 prices) Gross domestic product at market prices 6.1 8.3 7.7 6.2 2.3 0.7 1.5 3.2 3.0 Total consumption 4.9 8.6 7.5 4.7 0.1 3.9 1.4 2.7 0.2 Private consumption 5.2 9.2 7.5 4.6 -0.3 2.8 0.7 3.0 -0.5 Balance of Payments (US$ millions) Exports (GNFS)b 6961 9136 8420 8962 12928 12314 13315 14570 15853 Merchandise FOB 3526 4410 3964 4708 5318 5632 6226 6903 7563 Imports (GNFS)b 12075 16082 16760 18641 20044 21148 22717 24637 26320 Merchandise FOB 11197 15018 14945 16386 17619 18552 19978 21718 23202 Resource balance -5114 -6947 -8340 -9679 -7116 -8834 -9402 -10068 -10466 Net current transfers 2769 2360 1827 2601 2429 3254 3410 3750 4041 Current account balance -1605 -4149 -6741 -7588 -4866 -6204 -7247 -8127 -8924 Net private foreign direct investment 2528 3346 3678 3793 2731 3312 3560 3848 4168 Long-term loans (net) 5294 5760 10286 1637 2797 959 69 -64 730 Official 1672 543 -115 -98 -31 -80 -10 -91 -96 Private 3622 5217 10401 1735 2828 1040 79 27 827 Other capital (net, inc. errors & ommissions) -4180 -1497 676 5482 1334 3471 5239 5975 4897 Change in reservesd -2037 -3461 -7899 -3325 -1996 -1538 -1621 -1632 -871 Memorandum items Resource balance (% of GDP) -20.4 -23.1 -24.1 -26.1 -17.7 -20.6 -20.4 -20.3 -19.8 Real annual growth rates ( YRO2 prices) Merchandise exports (FOB) 23.7 11.6 -6.0 16.3 9.5 3.8 7.5 7.7 6.4 Primary 26.9 21.2 -9.6 10.4 38.8 6.3 -8.8 2.1 5.0 Manufactures 21.9 6.0 -3.6 20.0 -7.6 1.6 22.5 11.5 7.2 Merchandise imports (CIF) 15.5 17.8 19.8 2.9 -4.3 2.3 4.0 5.0 3.7 (Continued) 38 Lebanon - Key Economic Indicators (Continued) Actual Fstimate Projected Inidicator 2007 2008 2009 2010 2011 2012 2013 2014 2015 Public finance (as % of GDP at market prices)e Current revenues 24.6 24.1 24.7 22.8 23.5 23.0 23.2 23.5 23.5 Current expenditures 31.2 31.1 31.8 29.2 28.0 29.4 29.1 28.1 28.0 Current account surplus (+) or deficit (-) -6.6 -7.0 -7.2 -6.4 -4.5 -6.5 -5.9 -4.7 -4.5 Capital expenditure 2.7 1.8 1.6 1.8 1.8 2.4 3.0 3.6 3.8 Foreign financing 5.5 -1.0 -0.3 -0.3 7.5 2.2 0.1 -0.1 1.4 Monetary indicators M2/GDP 277.1 266.5 284.7 298.0 295.5 292.8 294.9 301.4 310.7 Growth ofM2 (%) 10.9 15.5 23.1 12.1 7.1 6.1 8.0 10.0 10.0 Private sector credit growth / 62.4 72.1 50.9 91.1 80.8 51.2 52.4 65.5 74.0 total credit growth (%) Price indices(YR02 =100) Merchandise export price index 109.4 122.5 117.2 119.7 123.5 126.0 129.6 133.4 137.4 Merchandise import price index 114.3 130.2 112.4 121.3 142.2 127.9 132.5 137.1 141.3 Merchandise terms of trade index 95.7 94.1 104.3 98.7 86.9 98.5 97.8 97.3 97.3 Real exchange rate (US$/LCU) 191.6 185.9 191.8 196.8 201.0 205.9 210.8 215.9 221.0 Real interest rates Consumer price index (% change) 4.7 10.2 0.1 2.9 5.7 5.7 4.9 3.7 3.0 GDP deflator (% change) 3.9 9.9 6.2 0.1 4.9 5.6 4.8 3.5 2.8 a. GDP at factor cost b. "GNFS" denotes "goods and nonfactor services." c. Includes net unrequited transfers excluding official capital grants. d. Includes use of IMF resources. e. Consolidated central government. f "LCU" denotes "local currency units." An increase in US$/LCU denotes appreciation. 39 ANNEX B7: KEY EXPOSURE INDICATORS Actual Estirrusted Projected Idicator 2007 200)8 2009 2010 2011 2012 2013 2014 2015 Total debt outstanding and 63579 65582 73043 78956 87493 16057 16890 21040 19584 disbursed (TDO) (US$m)a Net disbursements (US$m)a 6962 1998 7495 5937 8505 3575 2778 3339 753 Total debt service (TDS) 1558 1633 1142 974 1084 1193 890 1171 2098 (US$m)a Debt and debt service indicators (%) TDO/XGSb 499.4 466.5 602.2 603.5 511.6 93.2 91.0 103.2 88.8 TDO/GDP 253.7 218.0 210.8 212.7 218.2 37.4 36.7 42.4 37.0 TDS/XGS 12.2 11.6 9.4 7.4 6.3 6.9 4.8 5.7 9.5 Concessional/TDO 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 IBRD exposure indicators (%) JBRD DS/public DS 6.6 10.0 10.7 3.2 5.9 5.9 8.0 5.1 2.4 Preferred creditor DS/public 16.2 15.6 29.5 31.3 34.1 29.9 34.6 23.5 11.7 DS (%) IBRD DS/XGS 0.5 1.0 0.7 0.2 0.4 0.4 0.3 0.3 0.2 IBRD TDO (US$m)d 529 458 408 411 521 481 445 429 230 Of which present value of guarantees (US$m) Share oflBRDportfolio (%) 0 0 0 0 1 0 0 0 0 IDA TDO (US$m)d 0 0 0 0 0 0 0 0 0 JFC (US$m) Loans Equity and quasi-equity /c MIGA MIGA guarantees (US$m) a. Includes public and publicly guaranteed debt, private nonguaranteed, use of IMF credits and net short- term capital. b. "XGS" denotes exports of goods and services, including workers'remittances. c. Preferred creditors are defined as IBRD, IDA, the regional multilateral development banks, the IMF, and the Bank for International Settlements. d. Includes present value of guarantees. e. Includes equity and quasi-equity types of both loan and equity instruments. 40 ANNEX B8A: IBRD OPERATIONS PORTFOLIO AND GRANTS As of March 31, 2013 Closed Projects 25 IBRD/IDA* Total Disbursed (Active) 139.09 of whtich has been repaid 48.80 Total Disbursed (Closed) 375.32 of which has been repaid 542.81 Total Disbursed (Active + Closed) 514.41 of which has been repaid 591.60 Total Undisbursed (Active) 323.39 Total Undisbursed (Closed) 0.00 Total Undisbursed (Active Closed) 323.39 Active Projects Difference Between Last PSR Expected and Actual Supervision Rating Original Amount in US$ Millions Disbursementse Project ID Project Name Development Implementation Fiscal Year IBRD IDA GRANT Cancel. Undisb. Orig. Frm ReVd Objectives Progress P050529 LB - Cultural Heritage and Urban Dev. MS MS 2003 58.5 27.3 0.3 0.3 P118187 LB - Education Development Project II MU MU 2011 40.0 39.9 7.5 0.2 P111602 LB-EmergencyFiscalManagementReform MS MS 2009 4.0 1.1 1.1 P111849 LB - ESPISP 2 MU MS 2009 6.0 1.8 1.8 1.8 P034038 LB - Urban Transport Development Project S S 2002 134.7 27.3 -42.4 27.3 P127306 LB Supporting Innovation in SMEs Project S S 2013 30.0 30.0 P103063 LB- Greater Beirut Water Supply MU MU 2011 200.0 198.9 48.9 Overall Result 463.2 10.0 326.3 17.2 29.6 41 ANNEX B8B: STATEMENT OF IFC's COMMITTED AND OUTSTANDING PORTFOLIO Amounts in US Dollar Millions Accounting Date as of: 03/31/2013 Region(s):Middle East and North Africa Country(s) : Lebanon ECommitted Outstanding Commitment Institution LN ET QL + QIE GT R ALL LN ET QL + QE GT RM ALL Fiscal Year Short Name Cmtd - IFC Cmtd - IFC Cmtd - IFC Cmtd - IFC Cmtd - IFC Cmtd - Part Out - IFC Out - IFC Out - IFC Out - IFC Out - IFC Out - Part '2007 ADMIC 0 4.60 0 0 0 0 0 4.60 0 0 0 0.00 2013 AMEEN 2.00 0 0 0 0 0 0 0 0 0 0 0.00 2013 BBAC 0 0 0 4.59 0 0 0 0 0 4.59 0 0.00 2013 BLC Bank 0 0 0 4.50 0 0 0 0 0 4.49 0 0.00 2007 BLOM 6.00 0 0 0 0 0 6.00 0 0 0 0 0.00 2013 Bank Beirut II 0 0 0 21.32 0 0 0 0 0 21.32 0 0.00 2013 Banque Libano F 0 0 0 16.50 0 0 0 0 0 16.50 0 0.00 '2008 Butec Holdings 0 0 15.00 0 0 0 0 0 15.00 0 0 0.00 2010 Byblos Bank 0 71.43 0 0 0 0 0 71.43 0 0 0 0.00 2013 CL sal 3.45 0 0 6.12 0 0 3.45 0 0 2.40 0 0.00 2013 Fransabank 1.84 0 0 42.86 0 0 1.84 0 0 38.57 0 0.00 '2011 MobiNetS 0 2.00 0 0 0 0 0 2.00 0 0 0 0.00 '2005 SIS Adma 1.64 0 0 0 0 0 1.64 0 0 0 0 0.00 Total Portfolio 14.93 78.03 15.00 95.89 0 0 12.93 78.03 15.00 109.34 0 0.00 42 ANNEX B8c: MIGA OUTSTANDING EXPOSURE Statement of MIGA'S Exposure including this and other projects approved by the Board in Lebanon as of March 31, 2013 1. MIGA'S EXPOSURE (CONTINGENT LIABILITY) Transfer Expropriation War & Civil Breach of Non Honoring of Maximum Restriction Disturbance Contract Sovereign Financial US$ million Obligations Gross Exposure 0.0 0.0 0.0 0.0 0.0 0.0 % of total portfolio 0.0 0.0 0.0 0.0 0.0 0.0 Net Exposure 0.0 0.0 0.0 0.0 0.0 0.0 % of total portfolio 0.0 0.0 0.0 0.0 0.0 0.0 CUP 0.0 0.0 0.0 0.0 0.0 0.0 Current Amount* 0.0 0.0 0.0 0.0 0.0 0.0 * On a gross basis 2. NET EXPOSURE BY SECTOR Lebanon Middle East and North Africa MIGA Worldwide US$ million % US$ million % US$ million % Agribusiness 0.0 0.0 2.5 0.4 163.3 2.6 Construction 0.0 0.0 0.0 0.0 5.8 0.1 Financial 0.0 0.0 0.0 0.0 2,074.4 33.1 Financial Services 0.0 0.0 0.0 0.0 14.1 0.2 General Banking 0.0 0.0 0.0 0.0 1,758.2 28.1 Investment Fund 0.0 0.0 0.0 0.0 0.0 0.0 Leasing 0.0 0.0 0.0 0.0 181.7 2.9 Mortgage 0.0 0.0 0.0 0.0 120.4 1.9 Infrastructure 0.0 0.0 259.8 44.1 2,672.6 42.7 Electric, Gas and Sanitary Services 0.0 0.0 3.7 0.6 67.0 1.1 Power 0.0 0.0 0.0 0.0 808.3 12.9 Telecommunication 0.0 0.0 67.5 11.5 536.6 8.6 Transportation 0.0 0.0 0.0 0.0 609.0 9.7 Water Transportation 0.0 0.0 188.6 32.0 291.2 4.6 Water Supply 0.0 0.0 0.0 0.0 280.5 4.5 Other 0.0 0.0 0.0 0.0 80.0 1.3 Manufacturing 0.0 0.0 145.3 24.7 460.9 7.4 Mining 0.0 0.0 0.0 0.0 170.7 2.7 Oil and Gas 0.0 0.0 177.7 30.2 436.5 7.0 Retail 0.0 0.0 0.0 0.0 118.4 1.9 Services 0.0 0.0 3.4 0.6 157.6 2.5 Tourism 0.0 0.0 0.0 0.0 5.5 0.1 Total 0.0 0.0 588.7 100.0 6,265.7 100.0 43 IBRD 33433R 35°30'E 36°00'E 36°30'E 7O TO , Hims ¯ Al Hamiia Tall Kolokh LBANN- Qoubauyat LE NON-Halba 34°30'N 34°30'N TripoliAbou MoFuna Al usa Zhgarta Hermel NORT H Chekka LEBANON Sib'ila i Mhin Amioun Bcharri• O Doumnat Al Labwýah Mediterranean oB Al Aqurah IE ANTTWN NoSa en Jbeilo 'A'o Nabkd y ® NAINL IA \Q Badibeck 34°00'N Jounie 34°00'N M OUNT BEIRUT R EA O BEIRIJI ntilyasn B E,Ko A Baab a .rHammanarZah e m m a n ap a he h T O u AzZabadani Damour Beit ed Dine Jieh fT7 4Joub Jannine, ADra Saida JezzineQaraaoun 33°30'N El Zahrani Rachaiya . ....33ý30'N 0 10 20 30 Kilometers N e •0 10 20 M21es NaaiyhMar.ylayoun , 60' Tyre SOAin H _AU E - LEBANON L ~ ~ ~ I E0 O o o°a SELECTED CITIES AND TOWNS Tibnine Hula smoae GOVERNORATE (MOHAFAZAT) CAPITALS Naqorq//Thiý pýd.d ® NATIONAL CAPITAL Naor Bent Jbail -Pi Unpiwa p ofæ byIVR Rmaid . 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