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Lebanon Sinking into One of the Most Severe Global Crises Episodes

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Photo: Marten Bjork/Unsplash

Lebanon is enduring a severe and prolonged economic depression. According to the latest World Bank Lebanon Economic Monitor (LEM) released today, the economic and financial crisis is likely to rank in the top 10, possibly top 3, most severe crises episodes globally since the mid-nineteenth century. In the face of colossal challenges, continuous policy inaction and the absence of a fully functioning executive authority threaten already dire socio-economic conditions and a fragile social peace with no clear turning point in the horizon. 

The Spring 2021 edition of the LEM, “Lebanon Sinking: To the Top 3” presents recent economic developments and examines the country’s economic outlook and possible risks. For over a year and a half, Lebanon has been facing compounded challenges: its largest peace-time economic and financial crisis, COVID-19 and the Port of Beirut explosion.

As The Deliberate Depression (LEM – Fall 2020) already laid-out, policy responses by Lebanon’s leadership to these challenges have been highly inadequate. The inadequacy is less due to knowledge gaps and quality advice and more the result of: i) a lack of political consensus over effective policy initiatives; and ii) political consensus in defense of a bankrupt economic system, which benefited a few for so long. With a history of a prolonged civil war and multiple conflicts— Lebanon is identified by the World Bank as a Fragility, Conflict & Violence (FCV) State— there is growing wariness of potential triggers to social unrest.  The increasingly dire socio-economic conditions risk systemic national failings with regional and potentially global effects. 

The World Bank estimates that in 2020 real GDP contracted by 20.3 percent, on the back of a 6.7 percent contraction in 2019. In fact, Lebanon’s GDP plummeted from close to US$55 billion in 2018 to an estimated US$33 billion in 2020, while GDP per capita fell by around 40 percent in dollar terms. Such a brutal contraction is usually associated with conflicts or wars. Monetary and financial conditions remain highly volatile; within the context of a multiple exchange rate system, the World Bank average exchange rate depreciated by 129 percent in 2020. The effect on prices have resulted in surging inflation, averaging 84.3 percent in 2020. Subject to extraordinarily high uncertainty, real GDP is projected to contract by a further 9.5 percent in 2021.

Lebanon faces a dangerous depletion of resources, including human capital, and high skilled labor is increasingly likely to take up potential opportunities abroad, constituting a permanent social and economic loss for the country,” said Saroj Kumar Jha, World Bank Mashreq Regional Director. “Only a reform minded government, which embarks upon a credible path toward economic and financial recovery, while working closely with all stakeholders, can reverse further sinking of Lebanon and prevent more national fragmentation”.  

Conditions in the financial sector continue to deteriorate, while a consensus among key stakeholders on the burden-sharing of losses has proved elusive. The burden of the ongoing adjustment/deleveraging in the financial sector is highly regressive, concentrated on smaller depositors, the bulk of the labor force and smaller businesses. 

More than half the population is likely below the national poverty line, with the bulk of the labor force -paid in Lira- suffering from plummeting purchasing power. With the unemployment rate on the rise, an increasing share of households is facing difficulty in accessing basic services, including health care.   

The LEM Spring 2021 also highlights in its Special Foci section two potential economic triggers that are under increased scrutiny, and which can have significant social implications. 

The First Special Focus examines Lebanon’s foreign exchange (FX) subsidy for critical and essential imports, which presents a serious political and social challenge, and discusses when and how to remove it. The current FX subsidy is distortionary, expensive and regressive; its elimination and replacement with a more effective and efficient pro-poor targeted program would improve the balance of payments—meaningfully extend the time-till-exhaustion of remaining BdL reserves—while helping to cushion the impact on Lebanon’s poor. However, these would still be temporary, suboptimal solutions. Only a comprehensive and credible macroeconomic stabilization strategy can prevent the country from running out of reserves and being forced into a disorderly and highly disruptive exchange rate adjustment.

The Second Special Focus of the LEM discusses the impact of the crises on four basic public services: electricity, water supply, sanitation and education. The Deliberate Depression has further undermined already weak public services via two effects: (i) it has significantly increased poverty rates, with a higher number of households unable to afford private substitutables, and thus becoming more dependent on public services; and (ii) it has threatened the financial viability and basic operability of the sector by raising its costs and lowering its revenues. The delivery of essential public services is critical to the wellbeing of residents. The sharp deterioration in basic services would have long-term implications: mass migration, loss of learning, poor health outcomes, lack of adequate safety nets, among others. Permanent damage to human capital would be very hard to recover.  Perhaps this dimension of the Lebanese crisis makes the Lebanon episode unique compared to other global crises. 

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Finance

How to Make Your Hospitality Business More Sustainable

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Climate change and its impact on the world has been a major news story for decades, but it’s only in recent years that awareness has been pushed to the fore. This is thanks to the actions of activists such as Greta Thunberg and Sir David Attenborough.

However, it’s also because 2020 was the joint hottest year on record, tying with 2016 – although, unlike 2016, there was no El Nino event last year to contribute to these temperatures.  

While there is pressure on companies to play their part and think more sustainably, there are things that smaller businesses can do too. As someone who runs a hospitality business, you can make operations more environmentally aware. If you want to think green, here are some ideas to help. 

Consider the materials

How much paper does your business use? There’s a real trend for cardboard menus and paper flyers showcasing the latest dining deals. Hotel rooms are filled with directories and leaflets, too – and these need replacing when they get tatty.

To resolve the issue, try switching to digital. Create online menus that diners can access, have a screen detailing the latest meal deals and specials, and introduce tablets to bedrooms in your hotel. If you’re reluctant to include tablets, try creating a directory on the TV where guests can browse the services your hotel offer, from breakfast serving times to the food on offer.

Rethink utilities

How much electricity does your business use a day? How much water is wasted?

Try looking at introducing motion sensitive lighting to avoid empty rooms being lit. Also, while it can be tricky to encourage guests to think about the water they use, you can get your staff to set an example by switching off taps when not in use. Even small changes can both save energy and money.

Manage waste

Hospitality businesses see a lot of waste, especially hotels. There’s paper waste, bottles, and food waste to consider, among other things.

Having a robust recycling system in place can help to keep your business sustainable. Introduce recycling bins in guest bedrooms and have these in offices too to encourage best practice.

Additionally, separate food waste bins for your restaurant are an essential part of waste management. By keeping food waste separate, it can be easily removed from the premises.

As with any waste management, there are risks here. Staff could cut themselves on glass or encounter other injuries, so think about how to keep your team safe while they do their job. Arm protection and overalls, for instance, can be useful.

Look at the décor

As well as the day-to-day operations in your business, it’s worth thinking about the materials used in the design and décor. Where possible, try to source reclaimed furniture and trawl the vintage and flea markets for beautiful pieces that could work well in your hotel foyer or guest rooms.

By taking the time to reassess the way your business runs, you could find that you’re lowering your carbon footprint and becoming more sustainable.

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Finance

Uzbekistan Continues to Modernize its Tax Administration System

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 The World Bank’s Board of Executive Directors approved today the Tax Administration Reform Project in Uzbekistan, which is designed to improve the operational efficiency and effectiveness of the State Tax Committee (STC) and deliver better services to local taxpayers.

The project will be supported by a $60 million concessional credit from the International Development Association (IDA), with financing provided to the Government at a very low-interest rate and a repayment period of 30 years.

“The Government of Uzbekistan has prioritized reforms in the tax administration system to create a better business and investment environment. The new project will help the STC improve its work in the interest of taxpayers,” said Marco Mantovanelli, World Bank Country Manager for Uzbekistan. “In particular, the project will allow to broaden the tax base, leading to a reduction in the informal sector of the economy, which is estimated to be around 50% of GDP; to increase tax revenues; and to help firms and companies create new jobs, benefiting from a more efficient tax administration system.”

The project includes three key components directed at improving the STC’s operational, institutional, technological and human resource capacities, and promoting voluntary compliance across Uzbekistan.

Component 1 will invest in automating the STC’s core tax administration business processes. This includes developing the STC’s new tax management information system to reduce paperwork and simplify the process of paying taxes by businesses and individuals countrywide; upgrading hardware and technological infrastructure; creating a new data center for the STC; and improving governance and the planning capacity of the STC’s IT department.

Component 2 will assist with designing and implementing measures to reduce the informal sector of the economy. This includes improving the STC’s enforcement capabilities to detect and discourage tax evasion; encouraging businesses to stay out of the shadows, including through the use of non-tax incentives; and developing cooperative relationships with the private sector, including through designing new or simplified tax policies and procedures and building partnerships to change taxpayers’ behavior.

Component 3 aims to strengthen the STC’s human resource and institutional capacities to attract, develop, and retain skilled and knowledgeable tax officials. This includes improving STC’s human resources management policies and building capacity through the continuous professional development of tax officials. 

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Top 5 Examples of Best Nonprofit Grant Proposals

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Introduction

Compiling a grant proposal is a complicated task. Nonprofits have to conduct ample amounts of research, create multiple drafts and compile everything to fit the criteria of the grant foundation. The odds of getting your proposal accepted are already stacked against you and the best way to ensure success is by staying prepared. One way you can make your grant proposal air-tight is by reviewing successful grant proposals. You can add points from previously successful documents to strengthen your case. 

Preparation is key

Drafting a grant proposal can be a lengthy process. It is a good idea to start gathering data and reviewing it beforehand. Reviewing successful grant proposals can help you get new ideas and perhaps, inspiration even. You can find a list of effective examples on the internet and we have compiled a few here to make things easy for you.

5 Examples of effective grant proposals

To ease the understanding, the examples are divided as per the sectors for which nonprofits often work.

Education

Education is a key foundation for society and if you are looking to seek a grant to support an educational initiative, this particular example might be conveniently helpful.

Salem Education Foundation: This particular grant was submitted by a school that sought to receive funding for enriched learning opportunities that lay beyond the scope of a conventional classroom. This particular grant proposal was written for history students of the school.

Youth

Children can be the most at-risk group of society and there are a multitude of nonprofits that aim to help them. Consequently, there are a huge number of grants that aim to help children fulfill their potential and lead happy lives. The following example is how a grant proposal should look like when the focus of their goal is improving the lives of children.

William T. Grant Foundation: This grant is given to those groups that actively conduct research that is solely focused on improving the lives of young people in the United States. The foundation often publishes accepted grant proposals to help guide those looking to apply. Review their proposals for a better idea on how to craft yours.

Individual and family support

If your nonprofit is actively seeking to serve the disadvantaged population of society, then you will need to submit a proposal that highlights their plight. The following proposal is an example that will help you decide the inclusions for your proposal.

Kennett Area Senior Center: This particular grant was submitted by the Kennett Area Senior Center to the community grant foundation. The grant proposal was a request for funds to provide assistance and necessary services for senior citizens.

Arts

If your nonprofit is aiming to raise funds for an arts program or a project, the following example demonstrates what your grant proposal should look like. Upon review you will be clear on what to include in your documentation:

University of Minnesota’s Imagine Fund: Take a look at various successful proposals that were submitted to the Imagine Fund program. This program is known for supporting arts-related projects.

Science

Whether it is scientific research, conservation, or any form of scientific endeavor, the following proposals can provide you with ideas for your grant proposal. You can review them and figure out what to include and how you can solidify the strength of your proposal.

NIAID: The National Allergy and Infectious Diseases grants various funds to institutes and nonprofits looking to drive advancement in the field of science and scientific research. You can peruse through various types of successful grants and figure out what made each one stand out.

Final thoughts

These examples are just some of many grant proposals that have achieved success. By studying them and reviewing the literature, your nonprofit can take away ideas and insights which can be useful in drafting your proposal.

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