Lebanon’s New President: A Turning Point for International Trade?

After two years of political void, Lebanon has finally elected a new president on January 09, 2025. President Joseph Aoun secured 99 out of 128 votes in the Lebanese Parliament, marking a significant majority. This election signals the beginning of a new chapter for Lebanon, after facing years of severe challenges, including an ongoing economic crisis and institutional paralysis. With President Joseph Aoun's proposed political reforms and a focus on revitalizing Lebanon's role on the international stage, there is renewed optimism that the country can regain its position in global trade and the international community.?

Lebanon’s Economic Crisis and Its Impact on Trade?

Since 2019, Lebanon has been facing a severe financial crisis. The economy has suffered from several key factors:?

• A banking crisis: depositors lost access to their bank accounts and savings; furthermore, international transactions became nearly impossible.?

• Currency devaluation: the Lebanese pound (lira) lost more than 90% of its value, making the cost of imports extremely expensive.?

• Loss of investor confidence: the absence of political stability and economic reforms discouraged foreign investments.?

• Trade disruptions: Lebanon that relies significantly on imports, struggled to secure essential goods due to currency fluctuations and banking restrictions.?

These factors have had a profound impact on international trade, especially:?

• International money transfers were extensively restricted, making it difficult for businesses and individuals to operate.?

• Fresh dollar accounts became a necessity, as traditional bank accounts were frozen, and only fresh funds (newly transferred or deposited in foreign currency) were permitted for international transactions.?

• Trade relations weakened as foreign suppliers were reluctant to engage with Lebanese businesses due to payment delays and financial instability.?

• The tourism sector has been severely impacted, causing further limitation to the country’s ability to earn foreign currency.?

A New President, A New Direction??

With the election of the President Joseph Aoun, some indications of renewed international confidence are beginning to emerge:?

• Diplomatic reconnection: several countries have resumed discussions with Lebanese officials, signaling interest in economic cooperation.?

• Focus on fresh dollar accounts: the focus on fresh dollars accounts has provided a mechanism for businesses to reintegrate into international trade again.?

• Gulf nations re-establishing ties: Gulf countries, which have historically been major investors and trade partners in Lebanon, are planning to re-engage with Lebanon, presenting a promising development for its economic recovery.?

The Road to Recovery?

While the election of a new president is an important step, Lebanon’s economic and financial recovery is a long way ahead. The government must take decisive measures, including:?

• Implementing financial reforms: rebuilding trust in the banking system is essential, hence, reforms must be introduced to facilitate international money transfers and restore confidence.?

• Collaboration with the IMF and World Bank: working with international financial institutions can help secure fundamental financial aid and ensure the implementation of reliable economic policies.?

• Strengthening anti-corruption measures: to attract foreign investment, Lebanon must demonstrate a commitment to eliminating corruption and building a stable and transparent business environment.??

IA Insights

After enduring prolonged economic and institutional challenges, Lebanon has begun its first steps toward recovery with the election of a new president. However, this alone is not enough to restore economic and financial stability. The Lebanese government must take bold actions and implement essential reforms to strengthen its position in international trade. A stable financial system is key to regaining investor trust and encouraging trade partnerships. Many countries are paying close attention to Lebanon’s progress, to seize this opportunity and build a stronger, more sustainable economy.?

Written by: Lea Nasr

*This article is informative and is not to be used as legal, economic, or commercial advice.