May 2019
The CEDRE Reform Program Requires a Credible Action Plan

More than one year has already passed since the CEDRE conference. The newly formed government of Prime Minister Saad Hariri adopted many of the CEDRE reforms in its ministerial statement. Since then, the government has adopted some of the reforms that pertain to the electricity sector as promised in the CEDRE document. Currently, the government is debating measures to reduce the budget deficit to meet the 1% target it outlined in the CEDRE program.

However, to assess the progress of reform program implementation we need to ask a more basic question: What reform pledges were made at CEDRE? As the Lebanese Center for Policy Studies shows in recent research, the reform program documents—the ‘Vision for Stabilization, Growth and Employment’ as well as the Capital Investment Plan—comprise 73 measures distributed across five policy areas: 32 sectoral measures covering electricity, solid waste, telecommunication, transportation, and water; 23 fiscal measures which relate to improving tax collection and reducing loopholes, improving budget transparency, public debt management, and e-services for the Ministry of Finance; 11 governance measures which cover public sector procurement, modernization and restructuring of the public sector, and digital transformation of the government; four private sector developments that address modernizing the legal status of businesses, adopting an e-transaction and protection of personal data law, and transforming the Beirut Stock Exchange into a joint stock company; and three judicial reforms that exclusively focus on automation of operations, judicial procedures, and the reinforcement of judicial institutions’ capacities.

Many of these measures show few new and innovative initiatives and rely mostly on past reform programs and strategies. For example, there is significant overlap between policy measures proposed at the CEDRE conference and those of Paris III in 2007. Overall, some 35% of all CEDRE measures and almost 70% of the CEDRE program that pertains to fiscal measures such as widening the revenue base were already part of Paris III. Moreover, many other CEDRE measure—more specifically sectoral ones—are based on long-existing projects or strategy papers. Take for example the 2002 Telecom Law No. 431, which demands the formation of a telecom regulation authority, or the Capital Markets Law No. 161 from 2011, which is aimed at turning the Beirut Stock Exchange into a Lebanese joint-stock company.

Given the governments’ constrained institutional capacities, the main challenge in meeting the obligations of the CEDRE reform agenda will be the degree of commitment the government enters into to implement the reform program. Such commitments refer to the amount of political, institutional, or administrative resources required to meet a specific reform target. The majority of reform measures in the program involve either a high or medium degree of political and institutional commitments. In particular, the government promised to introduce or establish 18 new formal institutions, which will require a high amount of financial and institutional resources given that little of the necessary legal and institutional groundwork has been laid.

Only seven measures refer to draft laws that are elaborated and pending decision. The majority of measures, 42% or 31 in total, concern the improvement of already existing procedures or institutions, such as the improvement of cash and debt management at the Ministry of Finance. These measures relate to programs that are ongoing within ministries, regardless of the reform pledges made during CEDRE, and therefore primarily require institutional resources. The development of plans and strategies as well as the evaluation of procedures or institutions, being mostly administrative in nature, make up 12% each.

Lastly, and most importantly, most measures are vaguely formulated, which effectively means that the majority of measures evade accountability mechanisms. Very few of the measures introduced in the program mention or refer to specific targets, or actors or institutions responsible for implementing them.

That way, the government evades references to targets or concrete outcomes which could be monitored. Some of the fiscal policy measures, for example, refer to formulations like “strengthening” risk management or “improving” cash management without identifying any goals or targets. Also consider the strategy to deal with prospective revenues from oil exploration. The documents cite the intention to draft a law on establishing a sovereign wealth fund without the commitment to eventually pass and implement the law.

Furthermore, some of the stated measures must, by law, be implemented independently of the CEDRE program. For instance, adopting the budget prior to the start of the year cannot constitute a reform measure as the government is constitutionally compelled to prepare and pass it. The government is legally obliged to implement these laws, hence it should not be praised for carrying out its duties. 

In effect, the program—at least in its present published form—represents a list of intentions rather than a dedicated reform program. It’s time for the government to develop an actionable agenda.