A sign of hope: Lebanon’s path to economic reform

The recent visit of Lebanese President Joseph Aoun to Saudi Arabia has offered a rare glimmer of optimism for Lebanon’s economic recovery and political stability. As the country grapples with an extended financial crisis, exacerbated by governance challenges, this visit—Aoun’s first official trip abroad since taking office in January—signals a potential turning point.

Saudi Arabia remains a key regional ally, and Lebanon is in urgent need of both investment and diplomatic backing. The reaffirmation of cooperation and reform between the two nations has fueled cautious hope that Lebanon may finally be taking steps toward long-overdue economic stabilization. Rabih El-Amine, chairman of the Lebanese Executives Council, emphasizes the significance of this visit: “Lebanon has the chance to reshape its relations with Arab nations, with Saudi Arabia as the essential gateway.”

However, while strengthening regional ties is critical, the real challenge lies within Lebanon itself. The country’s financial system remains in disarray, weakened further by persistent misgovernance and corruption, which have eroded international credibility and deterred much-needed foreign investment. As El-Amine underscores, “Lebanon’s economic recovery depends on reforms, International Monetary Fund negotiations, and restoring investor confidence—factors that require long-term engagement rather than quick diplomatic wins.

The corruption crisis

Lebanon’s struggle with corruption continues to be a major impediment to its recovery. The country recently dropped two points in the Corruption Perception Index (CPI), scoring just 22 out of 100—its worst rating in years—placing it 154th out of 180 countries. Transparency International has warned that while Lebanon’s new leadership signals potential change, reform efforts remain insufficient. Political speeches alone, however inspiring, cannot erase decades of entrenched corruption that have crippled state institutions, discouraged investment, and undermined public trust.

A significant portion of Lebanon’s financial collapse can be traced back to systemic corruption in governance and the banking sector. Inaction has proven costly, as Lebanon has seen a dramatic deterioration in its economic conditions. Transparency International has emphasized that real change will only come through concrete actions, such as enforcing anti-corruption measures, increasing judicial independence, and ensuring accountability in public financial management. Several new initiatives, including Lebanon Aid Monitoring Platform (LAMP) and Ekhbar, aim to improve oversight and empower citizens to report corruption, but without legislative and executive backing, their impact will be limited.

The long road to reform

President Aoun faces a daunting task in tackling corruption. Lebanon’s latest ranking in the CPI reflects a troubling decline, dropping five places from the previous year. The price of inaction is clear: corruption hinders economic recovery, weakens investor confidence, and compromises Lebanon’s future. Without firm measures to rebuild confidence, any hope of financial recovery will remain elusive.

Yet, Lebanon’s struggle with economic reform is not new. Over the years, multiple attempts to implement necessary changes have faltered, often due to entrenched political resistance and vested interests. One of the most notable and promising reform efforts was spearheaded in 2020 by Alain Bifani, then Director General of the Ministry of Finance. As a key architect of a financial rescue plan negotiated with the International Monetary Fund, Bifani pushed for restructuring Lebanon’s banking sector and protecting small depositors. His proposals, seen as a solid and credible framework for recovery, were ultimately discarded, leading to deepening financial distress. His resignation in protest underscored the difficulty of implementing real reform in a system resistant to change.

What happens next matters

At the heart of Lebanon’s recovery must be structural reforms that go beyond isolated policy changes. This includes enforcing fiscal discipline, modernizing financial regulations, and depoliticizing key institutions. Lebanon’s banking sector, which remains paralyzed, requires urgent restructuring to restore confidence. A roadmap for transparency in public finance, including an independent oversight body, could serve as a cornerstone for institutional credibility. Additionally, business environment reforms—such as simplifying bureaucratic procedures, ensuring fair competition, and removing barriers to investment—are essential to unlocking economic growth.

However, reforms cannot be limited to financial restructuring. Lebanon’s economic challenges also stem from years of neglect in public infrastructure and social safety nets. Inflation, exacerbated by a collapsing currency and high energy costs, continues to push the poverty rate beyond 80% of the population. The government’s failure to implement targeted subsidies and strengthen social welfare systems has left vulnerable communities without support. Establishing a transparent mechanism for aid distribution and financial relief programs must be a priority if Lebanon hopes to mitigate the worsening humanitarian crisis.

A commitment to change

Despite the immense challenges, progress is possible. The Lebanese government must move beyond short-term diplomatic engagements and commit to these structural reforms to restore financial stability. Strengthening institutional transparency, creating a predictable regulatory framework, and fostering an investor-friendly climate are necessary steps toward long-term recovery. Without these efforts, Lebanon risks remaining in an economic limbo, where political promises fail to translate into meaningful change.

President Aoun’s visit to Saudi Arabia may be a step in the right direction, but without concrete reform, it risks becoming yet another missed opportunity. The path forward will require not only diplomatic overtures but a genuine commitment to economic transformation.