Lebanon Emergency Crises and Covid-19 Response Social Safety Net Project Second Additional Financing

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Lebanon is currently in a high-risk situation as it faces a combination of a balance of payments crisis, coupled with a deep economic crisis, compounded by the COVID-19 outbreak. The impending economic crisis, if unmitigated, will exacerbate poverty and inequality, and in turn economic suffering and social strife. According to World Bank staff’s calculations, the current crisis is expected to result in high inflation and negative gross domestic product growth, which would result in more than doubling of extreme (food) poverty from 10 percent to 22.5 percent, and an increase in poverty from a current nowcast rate of 32.9 percent at present to 45 percent later in 2020. The coverage of and spending levels on safety net programs in Lebanon were low pre-crisis and are certainly insufficient today to ensure poor households against the effects of the crisis. Today, Lebanon’s main targeted Social Safety Net (SSN) system is small - reaching barely 4 percent of the poor - primarily due to budgetary constraints. The primary SSN program is the National Poverty Targeting Program (NPTP), which the Bank has been supporting through grants, and which targets only the extreme poor (those falling under the food poverty line). The government of Lebanon has recently started to scale up NPTP to reach 75K households. With the parent project, ESSN, GoL has reached 76K beneficiaries in the program. NPTP and ESSN in total managed to reach 151K households covering almost 15.1% of the extreme poor. The parent project intends to reach 150K + 10K vulnerable groups and together with NPTP, the SSN programs in Lebanon intend to reach the full coverage of the extreme poor and more. Like the parent project, ESSN AF2 aims to provide: (i) cash transfers to the extreme poor Lebanese households; (ii) top-up cash transfers for students from extreme poor Lebanese households at risk of dropping out of school; (iii) enhanced social services to the vulnerable Lebanese; (iv) enhanced social safety nets program delivery; and (v) CERC. Funding of the assistance for the extreme poor households is provided for one year.