The compounding shocks that have hit Lebanon since the summer of 2019 have led to severe social repercussions. The financial crisis, the COVID-19 pandemic, and the Beirut port explosion collapsed the state's public finances and pushed 82% of the population into multidimensional poverty.¹ The ruling class, meanwhile, eschewed arresting the crises with structural interventions, deliberately protracting socioeconomic malaise.²

These unprecedented shocks, by extension, rendered the state’s capacity to allocate public spending challenging. Luckily, Lebanon’s public accounting law authorizes the government and parliament, under exceptional circumstances, to transfer funds from the budget reserve and open additional credit lines not accounted for in yearly national budgets.³ This form of public spending, unlike financial transfers that happen systematically on the basis of the one-twelfth rule in the absence of a budget law,⁴ requires the approval of parliament and/or the government at every instance—making it discretionary. This discretionary spending is quite significant, as it accounted for 37% and 16% of budgetary spending in 2020 and 2021, respectively. 

To this end, this article assesses how politicians have chosen to allocate exceptional public spending since August 2019. More specifically, this article seeks to evaluate the state’s: (1) spending priorities; and (2) social protection spending. To do that, The Policy Initiative (TPI) subjected legislation published in the Lebanese Official Gazette between August 2019 and June 2022 to two coding methodologies. First, the collected financial transfers were categorized following the IMF Government Finance Statistics Manual’s “Classification of Expense by Government Function.^”5 Second, the transfers that fall under the category of social protection were disaggregated under the five social protection pillars: social insurance, social assistance, social welfare, financial access to services, and economic inclusion and labor activation. ⁶

During this period, Lebanon’s discretionary public spending reached LBP 19.2 trillion, most of which directed towards social protection (60%) and economic affairs (35%),⁷ followed by general public services (5%) (Figure 1).

Since the onset of the financial crisis, discretionary spending on social protection reached LBP 11.4 trillion. Disaggregating the total amount reveals that the allocation was disproportionately concentrated in contributory social insurance (75%). The remaining amount was directed towards non-contributory forms of social protection, namely social assistance (9%), financial access to services (11%), and economic inclusion and labor activation (5%) (Figure 2).

Moreover, the breakdown of social protection spending by beneficiary group shows that the state’s spending patterns were significantly skewed towards public sector beneficiaries (Figure 3),⁸ who received almost LBP 8.5 trillion (74%) but are estimated to be around one fifth of the labor force.⁹ These benefits comprised social insurance contributions, such as end-of-service indemnities and contributions to the Cooperative of Civil Servants, army and general security cooperatives, military personnel and civil servants.

The majority of these contributions took place between August 2021, when subsidies were effectively lifted, and April 2022, ahead of the elections season. These contributions targeted workers in public administrations and aimed to mitigate their diminished purchasing powers due to the extreme depreciation of Lebanese currency—the lira.¹⁰

The authors would like to thank Sami Atallah and Sami Zoughaib for valuable feedback, as well as Bassel Hassan for research assistance.