Remittances from Lebanese expatriates have formed the last line of financial defense for resident families in the face of economic collapse since 2019. In times of wars and crises, these remittances increased as a rapid solidarity response, which strengthened the steadfastness of families and secured a minimum level of living stability.
Today, with the renewal of the war, and coinciding with the decline in tourism and the severe economic downturn, the need for these cash flows has doubled, which directly finances the spending of families, especially displaced ones, and covers their basic needs, to remain one of the basic pillars of social resilience. However, this financial valve is facing an unprecedented test with the escalation of the war and its expansion regionally, especially towards the Gulf countries, which host a large segment of the Lebanese expatriates. Therefore, the question is no longer limited only to the size of remittances, but rather extends beyond that to the ability of expatriates themselves to continue this support, in light of the economic pressures and risks that may affect their work environments in the Gulf countries.
Increase in conversions in the short term
According to official estimates, the value of these transfers ranges between $6 and $7 billion annually, with actual numbers likely exceeding that, as a result of informal channels. The number of Lebanese working in the Gulf countries is estimated at about 600 thousand expatriates, distributed mainly between Saudi Arabia (about 250-300 thousand), the Emirates (about 150 thousand), Qatar (about 100 thousand), Kuwait (50 thousand) and other countries. This large number makes any disturbance in the Gulf directly reflected in the Lebanese economy.
Economist Dr. Bilal Alama pointed out in an interview with “Lebanon 24” the high value of remittances from diaspora countries in the first days of the war, with the worsening displacement, loss of sources of income, and rising costs of living due to inflation, high prices, and high rent allowances, which is known economically as “the solidarity behavior of expatriates.”
The continuation of the war threatens remittances from the Gulf
This high pace of remittances has begun to decline, especially from the Gulf countries, in light of the new economic and security changes, with oil facilities exposed to attacks and a partial disruption in production, according to Alama, noting that these developments have prompted the Gulf countries to take precautionary measures, the repercussions of which have gradually begun to appear on expatriate remittances. Accordingly, it becomes difficult to assume that flows will continue with the same momentum, as expatriates work within economic environments that have their limits and pressures, where risks are increasing, whether through a decline in job opportunities, an increase in the cost of living, or expatriates resorting to reducing their remittances out of caution. As the war continues or expands, this capacity erodes, turning remittances from an increasing element of support into a resource threatened by decline, putting one of the most prominent pillars of economic resilience in Lebanon to a real test.
Expatriates between company relocation and job loss
Alama points to a new challenge, as the expansion of the war prompted some Gulf companies to move their business to other countries, as happened in the Emirates, where companies moved from Dubai to the Sultanate of Oman. This move puts the Lebanese expatriates working in these companies in front of a real dilemma, as they face difficulty in moving with the company, which may lead to them losing their jobs or being forced to search for job alternatives, which negatively affects their ability to support their relatives and families in Lebanon.
The spread of the Lebanese in the world supports and does not compensate for Gulf remittances
Although the wide spread of the Lebanese in various parts of the world provides a kind of diversification in the sources of remittances, which partly reduces dependence on one region, this factor does not eliminate the great weight of the Gulf countries, and it cannot compensate for any sharp decline in the flows coming from them. In addition, remittances from expatriates from countries geographically distant from the scope of the conflict do not remain immune to the consequences of the conflict, as they are in turn affected by the global economic repercussions of the war, in terms of inflation resulting from the threat to energy security and the rise in oil prices, which reflects on the purchasing power of expatriates and limits their ability to transfer additional amounts to Lebanon.
The exchange rate is under pressure from remittances and war
Expatriate remittances played a pivotal role in covering the balance of payments deficit and supporting dollar liquidity in the local market, which directly contributed to limiting the deterioration of the exchange rate. However, according to Alama, these channels may face additional restrictions, in light of the tightening of international control and the widening scope of sanctions targeting financial individuals and institutions, in addition to the increasing financial measures. He explains that the stability of the Lebanese pound is still linked to three basic factors: the volume of dollars entering the country, remittances from expatriates or other transfers resulting from illegal gambling games, and sports betting that has been active recently, as well as the extent of the Bank of Lebanon’s intervention in the market, and the level of demand for imports. He added, “If the war continues for months and global prices rise by a rate that may reach 30%, in parallel with the disruption of supply chains, the exchange rate will begin to move under the weight of these pressures. Especially since the current monetary mass is engineered in a way that suggests relative stability in the exchange rate, but any vibration in this equation will lead to an increase in demand for the dollar, to finance imports via alternative routes to the Strait of Hormuz, which are by nature longer and more expensive. With the decline in remittances, the pressure on the foreign currency increases, and the cost of imports rises.” Which makes stabilizing the exchange rate more difficult.”
He concludes that this reality may remain containable for a short period not exceeding two months, if conditions remain the same, warning that if the crisis escalates and becomes more complicated, the pressures on the dollar will increase, which will open the door to additional depletion of the Lebanese financial situation, and threaten the existing monetary stability.
Economic losses continue after the war
The repercussions of the war are not limited to its time period only, as its economic effects extend beyond it, especially through inflationary pressures and uncertainty that push those with excess liquidity to prefer saving over production, which reflects a slowdown in economic activity. Thus, the ability of expatriates to continue supporting their families declines at the same pace, and accordingly, the bet on remittances becomes more fragile, in times of war as well as in the period after it, which exposes the fragile Lebanese economy to more losses and challenges.
