Social Protection Spending in Lebanon: A deep dive into State Financing of Social Protection
Although Lebanon spends around 13.8% of its GDP and 30% of its public expenditures on social protection, coverage is among the lowest and most inequitable. Understanding how social protection is financed and structured is a prerequisite for designing an adequate and coherent policy response especialy in light of recent challenges the country is facing. Moreover, analysing spending and financing trends provides critical information on financing gaps and insights on how restructuring can be less painful and more efficient.
As Lebanon is trying to figure out its social response amid rapidly deteriorating macroeconomic and fiscal conditions and disorderly crisis management, the Institut des Finance Basil Fuleihan-Ministry of Finance (include link), in collaboration with Financially Wise, and in partnership with UNICEF and the ILO, conducted a study on “Social Protection Spending in Lebanon: A Deep Dive into State Financing of Social Protection”.
The study analyzes, based on the Government of Lebanon State Budget, how social protection services and programs were financed during the period 2017 to 2020. It focuses on spending composition and patterns, beneficiary groups, financing gaps and main sources of funding. The analysis adopts a wide and comprehensive perspective for data collection and analysis that goes, for the first time, beyond the traditional budget classification to account for all categories of social protection spending. The study also proposes a set of recommendations on structural changes needed at the policy and institutional levels to improve both spending inclusiveness and efficiency. By doing so, it hopes to inform the development of a new Social Protection Strategy for Lebanon and the Lebanese people.
- Lebanon s spending on social protection between 2017 and 2020 reached 13,86% of GDP and 30% of public expenditures when using an expanded definition.
- Social protection spending is skewed towards public sector beneficiaries, who benefit from more than 45% of allocations. One third (32,9%) of SP spending benefits to military personnel, in the form of pensions and end-of-year indemnities, hospitalization and school allowances. Around 12.8% goes to civil and education personnel. Less than a quarter (23%) of spending goes to private sector workers.
- Poor and vulnerable groups suffer from recurrent underspending. More than 68% of SP spending targeting poor and vulnerable categories is provided by the Ministry of Public Health while only 20% is provided by the Ministry of Social Affairs.
- Social Insurance gets the largest share of spending, varying between 53% and 63%. Under Social Assistance, subsidies absorb more than 90% of spending, leaving minimal no room for other effective assistance programs such as the expansion of tax financed social assistance schemes.
- Social welfare records systematic underspending, notably in the Government programs and transfers to SDCs. Spending on Labor Market Policies finances operations costs rather than effective employment and job activation programs.
- When social protection expenditures are analyzed across lifecycle contingencies, the largest share of spending goes to Old Age and Survivors, followed by well-being (incl. subsidies) and medical care. Maternity, Unemployment and Disability get the least share of spending. Spending on old age is also largely skewed towards the public sector (77.66% of available resources). Spending on medical care is mostly directed at formal private sector workers (35.3%) and military personnel (33.6%).
- In 2019 Lebanon spend 4 times more on fuel subsidies than on social spending on health and 138 times more than on social spending on education. Subsides absorb more than 90% of the social assistance budget, leaving no room for other effective assistance programs.
- Poor budget planning practices stand out, characterized by overspending in the public sector and underspending on social protection to poor and vulnerable groups. Overspending in SP targeting the military reaches 57%, while Systematic underspending on economic inclusion and labor activation ranges between 20 and 25%.
As we are committed to data openness and transparency, you can also have access to our complete dataset on http://www.institutdesfinances.gov.lb/publication/social-protection-spending-in-lebanon-a-dive-into-the-state-financing-of-social-protection/ and use it as input for complementary analysis.