UN-ESCWA (July 2019) — “Socioeconomic Impacts of Macroeconomic Reform Policies in the Arab Region”

Image: Alex Chatzipanagioutou; UN-ESCWA

International Financial Institutions (IFIs) encouraged neoliberal macroeconomic reforms for distressed developing economies. The standard reform package, known as the “Washington Consensus,” prescribes adjustments like macroeconomic stabilisation, openness to global markets and growing the domestic private sector. In their implementation, however, IFI-led policies often clashed with the UN Sustainable Development Goals (SDGs), which promote inclusive growth, social justice and conflict prevention.

IFI critics alleged that the reforms were only partially successful in macroeconomic terms, while often causing severe microeconomic and social impacts. Triangle, therefore, was commissioned to produce a technical paper that aims to test the hypothesis by evaluating Tunisia and Egypt’s experiences with neoliberal adjustment against the SDGs. The report contributed to the UNESCWA expert group meeting “Towards Inclusive Development for Conflict Prevention”. Triangle’s publication is the result of extensive research and analysis using a comparative case study approach to assess the relationship between macroeconomic policies and their socio-economic impacts.

The analysis conducted by Triangle found strong evidence to support the proposition that IFI-led reforms in the Arab region were only partially successful in macroeconomic terms, while often having severe microeconomic and social impacts in relation to Tunisia and Egypt. In both countries, IFIs focused on improving macroeconomic indicators without placing due weight on building public institutions capable of preventing corruption, promoting market competition, alleviating poverty and reducing inequality. This approach resulted in vast numbers of Tunisians and Egyptians not benefiting from realisation of the SDGs, even at times when the national economy was performing well. The recommendations put forth in the research would help IFIs to better align macroeconomic reforms in Tunisia and Egypt with the SDGs, with particular reference to SDGs 1, 8, 10 and 16.

Click here to read the full paper.

Triangle (May 2020) — Going Hungry: The Empty Plates and Pockets of Lebanon

Cover: Alex Chatzipanagioutou; Shutterstock

The Lebanese people are trapped in a nightmare. On top of the deadly, mysterious COVID-19 pandemic, they are grappling with an economic collapse so complete that, based on government estimates, it will take over 20 years to fix. Now virus and recession have joined forces to send food prices skyrocketing and household incomes nosediving. The result: almost half of the population struggles to put the most basic foods on their tables.

In truth, the looming spectre of widespread starvation is not a bad dream, but a reality deeply rooted in political decisions made over decades. Once the breadbasket of the Roman Empire, Lebanese agriculture now contributes just 3% of annual economic growth, despite providing jobs for one quarter of the national labour force. Farmers contend with woeful infrastructure, directly resulting from a chronic lack of state investment, and have weak bargaining positions against wholesalers and retailers. This makes Lebanese-made food neither particularly abundant nor cheap, with imported foods often being more affordable.

Lebanon can only navigate these perilous times by – quite literally – going back to its roots. With some state support, farmers could easily boost food sovereignty by growing more nutritious staples such as beans, lentils, and chickpeas, which have long been native to the region. The current economic order has driven Lebanese and refugees alike to the brink of starvation. The new Lebanon needs to put the people first, which starts with guaranteeing basic, universal food and nutrition security. Nothing less will allow this generation to uphold the old Lebanese adage that “nobody ever dies from hunger.” […]

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Triangle (March 2020) — Shake on It: A Fair IMF Package for Lebanon

Cover: Alex Chatzipanagioutou

Defaulting on Lebanon’s foreign-held debt may patched up the country’s financial wounds, but it has not stopped the internal bleeding. To achieve that, Lebanon will need a comprehensive reform package and a shot of fresh US dollars to recapitalise local banks and keep the economy moving. But, who will administer the shot? For a host of reasons, Lebanon is fast running out of willing international donors. Soon enough, Lebanon will be left with the world’s lender of last resort instead: the International Monetary Fund (IMF).

But there is a snag. The IMF is likely to demand economicmeasures similar to those which sparked a national uprising in October last year. A punitive package of reforms aimed purely at repayment of IMF loans and austerity would exacerbate inequality, push Lebanon deeper into recession, increase the debt-to-GDP ratio, and, in all probability, make repayment to the IMF almost impossible to achieve.

Instead, the IMF and policy makers should strike a deal which balances much-needed financial, economic, and institutional reform with the social realities of a country in the midst of an anti-establishment uprising. […]

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Triangle (December 2019) — Coming Clean: Time to Open Lebanon’s Chamber of Banking Secrets

Cover: Alex Chatzipanagioutou

As Lebanon descends into financial collapse, answers to crucial questions lie behind the shroud of banking secrecy – the strict laws that keep account information confidential. Are powerful citizens stashing illicit wealth inside Lebanese banks? Which account holders should take a progressive “haircut” after profiting from Lebanon’s regulated Ponzi scheme?

Banking secrecy also stands in the way of Lebanon achieving fairer, progressive, and more sustainable public finances, capable of reducing public debt and driving investment. Alarmingly, estimates suggest that Lebanon recovers less than half of its potential tax revenue. This situation has come about mainly due to the country’s dismally low top tax rate (20%), and the government’s failure to properly enforce and collect progressive taxes, which citizens pay based on what they can afford.

Alongside the government’s lax attitude to tax compliance, banking secrecy helps many Lebanese submit false tax returns, knowing that the Ministry of Finance cannot directly audit their bank accounts. The state has increasingly turned to more regressive taxes (most notoriously, the proposed WhatsApp tax), which disproportionately burden people with lower incomes. The result is widening inequality and social malaise — both evident drivers of the current protest movement. […]

Click here to read the full paper.