UNDP assists the government of Lebanon, in partnership with IFC, to introduce new insolvency reformsAug 13, 2014
UNDP Project “Public Policy Coordination Provided to the Office of the Presidency of the Council of Ministers (OPCM) Assists the Government of Lebanon, in Partnership with IFC, to Introduce New Insolvency Reforms
IFC, a member of the World Bank Group, is helping the government of Lebanon reform its bankruptcy law, part of a wider effort of the Presidency of the Council of Ministers (PCM) to improve the country’s investment climate and boost economic growth through private sector development.
PCM and IFC held a consultation with representatives of the public and private sectors to discuss ways to reform the bankruptcy law and meet international standards. There is currently no appropriate insolvency regime to help restructure viable businesses or transfer the assets of failed businesses.
“The Government of Lebanon is committed to improving the business environment in the country and to take advantage of Lebanon’s entrepreneurial potential” said Shadi Karam, Advisor to the President of the Council of Ministers “We are working with IFC to create a business environment in which small businesses can thrive and in turn help viable businesses that may be struggling. The Government is also committed to create the adequate framework that would enhance FDI flows and an upgrading of the legislative apparatus is certainly an indispensable step in this direction.”
While Lebanon is noted for its entrepreneurial spirit, its legal system is considered a major constraint to investment by the private sector, with over 40 percent of surveyed firms identifying it as a major obstacle to growth. Bankruptcy cases can take up to four years to be resolved and the cost of proceedings can be as high as 15 percent of the value of the estate.
The consultation is the first in a series of talks that will discuss reform measures and ways to build the capacity of insolvency practitioners. The aim is to help the government introduce new, more efficient insolvency legislation, and a training and supervisory framework to strengthen skills and increase the accountability of practitioners.
“Reforming the legal environment for dealing with distressed firms is an integral part of improving Lebanon’s investment climate, which is essential to maximize Lebanon's potential”, said Thomas Jacobs, IFC Resident Representative in Lebanon. “The reforms will help viable businesses to remain in the market, supporting jobs and contributing to the country’s economic growth.”
The program, supported by UNDP staff at the PCM, is funded by the European Union as part of PCM and IFC’s joint strategy in Lebanon, which focuses on improving the country’s investment climate, supporting trade and expanding access to finance for smaller businesses.