UN inaugurates municipal finance solutions to tackle financial challenges amidst the current Lebanese crisis

In line with its efforts to assist local authorities in addressing current socio-economic challenges, the United Nations Development Programme (UNDP) and the United Nations Human Settlements Programme (UN-Habitat), in collaboration with the Ministry of Interior and Municipalities (MoIM) and with the generous funding from the EU, launched the implementation of financial and administrative solutions for selected municipalities and unions of municipalities in Lebanon. This marks an important step towards improving accountability, transparency, efficiency, and effectiveness at municipal level.

In 2021-2022, the Municipal Empowerment and Resilience Project (MERP), a joint initiative between UNDP and UN-Habitat, conducted 11 municipal finance assessments covering 9 municipalities and 2 unions of municipalities. These assessments provided a better understanding of existing municipal finance systems, the challenges municipalities and unions face, and the potential pathways towards recovery.

The assessment underscored the obstacles posed by the current crisis to local governments, impeding their ability to collect local taxes and fees and effectively plan, budget for, and deliver key public basic services to their communities. In addition, the assessments pointed towards required municipal finance solutions for the 11 assessed municipalities and unions.

During three regional events held in Matn, Al-Fayhaa and Tyre regions on 3, 8 and 10 August respectively, MERP inaugurated the municipal finance and administrative solutions that have been implemented at the 11 assessed municipalities and unions. The solutions strengthen administrative and financial management, budgeting, and reporting at municipal level, including through digitization, the upgrading of IT systems, provision of soft and hardware (including servers, computers, printers, scanners, as well as data and back-up systems and back-up energy solutions), and the development of websites. Later this year, the municipalities and unions will receive additional hands-on coaching and training on the delivered solutions and hardware.

The municipal finance assessments also informed the development of a policy report, which highlights priorities for national policy and legislation reform to enhance municipal finances particularly within the context of the current economic crisis. The report was launched during a national event in May 2022, under the patronage of the Ministry of Interior and Municipalities. During the regional events, the report was launched and disseminated at the local level, in both Arabic and English languages.

“We are working on a law to adjust the municipal fees through two law proposals so municipalities will be able to increase their revenues through fees. The two law proposals should be signed by Parliament Members to take their formal process.” said Judge Elie Maalouf, Court of Audit.

“The step taken by the Municipal Empowerment and Resilience Project is the first of its kind to be set on the right track regarding municipal finances assessment in general, without which the municipalities will not be able to persist amidst the ongoing crisis.”

“The paragraph regarding the recommendations for the unions of municipalities, Article 9, is very remarkable in the report. It states that unions of municipalities should prepare immediate plans to improve the collection of payments owed by the members of the union. This recommendation may be the only solution to overcome the crisis that the Urban Community Al-Fayhaa is going through.”, said Eng. Dima Homsi, Director of Urban Community Al-Fayhaa.

“Municipalities are barely spending on operational daily expenses to keep going, so we are not having the chance to think development on new capital investments.” Mayor Nicole Gmayel, Bickfaya-Mhaydsseh Municipality.

“Against the backdrop of the economic crisis, enhancing municipal finance systems is a first step towards stability. It supports greater efficiency in municipal operations while simultaneously fostering transparency and accountability—vital elements in enhancing community trust. Moreover, strong municipal finance systems are a prerequisite for diversifying and expanding own income sources. This will support municipalities in the delivery of basic services, ultimately benefiting their communities.” said Marija De Wijn, Chief Technical Advisor, Municipal Empowerment and Resilience Project (MERP).