As state institutions falter, diaspora remittances have become a pillar of survival in Lebanon, funding healthcare, education and daily needs while deepening reliance on a dollarized, cash-based economy vulnerable to shocks.
An economy outside its borders
In Lebanon, dollars sent home by the diaspora are no longer a supplementary source of family support. They have become a pillar of economic survival. In 2023, remittance inflows reached $6.7bn, before easing to $5.8bn in 2024, according to the World Bank.
Banking and policy insiders expect 2025 inflows to hover between $5.8bn and $6bn, suggesting a stabilization near the $6bn mark despite ongoing political fragility and regional volatility. The resilience of these flows underscores how structurally embedded remittances have become in Lebanon’s economic model.
These are vast sums for a country of roughly five million people. But the real story lies not just in the volume it lies in dependence.
A country among the world’s most remittance-dependent
At a macroeconomic level, the numbers are striking. Remittances accounted for 30.7 per cent of GDP in 2023, falling to 17.7 per cent in 2024, according to World Bank estimates, a decline largely reflecting shifts in nominal GDP.
At its 2023 peak, Lebanon ranked among the most remittance-dependent economies globally, alongside countries such as Tajikistan and Honduras. Few middle-income countries rely so heavily on private external transfers to sustain domestic demand.
Between 2011 and 2021, Lebanon received an average of around $6.5bn annually, according to UNDP-cited estimates demonstrating a remarkable long-term stability despite wars, financial collapse and political paralysis.
In effect, remittances have become a structural component of Lebanon’s balance of payments not a temporary buffer.
Who benefits and who does not
According to survey data used by the World Bank, 14 per cent of households receive external remittances. Yet access is uneven: 18 per cent of non-poor households benefit, compared with only 7 per cent of poor households.
The paradox is stark. Remittances reduce hardship but do not correct inequality. They stabilize segments of society while leaving others structurally excluded.
A substitute for the state
Since the financial collapse of 2019, remittances have evolved into something deeper than family transfers. They now perform functions traditionally associated with the state. A joint UNICEF / LCPS report shows: 46 per cent of recipient households use remittances to finance healthcare and 18 per cent rely on them to pay school fees.
In a country where public services have deteriorated sharply, private cross-border transfers effectively finance health, education and social protection.
Remittances, in other words, have become a de facto substitute welfare system.
Before the crisis, they also supported property purchases, business investment and human capital accumulation. Today, their role has narrowed decisively to essentials: food, rent, medical care, schooling and precautionary cash savings in US dollars. The logic has shifted from growth to survival.
The rise of the cash economy
Perhaps the most profound structural shift concerns transmission channels.
According to UNDP data: banks handled less than 5 per cent of remittance flows, Money transfer operators accounted for around 30 per cent and informal channels absorbed nearly 65 per cent. Lebanon now receives billions of dollars largely outside its formal banking system.
This aligns with a broader transformation. The World Bank estimates that the share of the dollar-based cash economy rose from 26 per cent of GDP in 2021 to nearly 46 per cent in 2022.
Increasingly, remittances arrive via agent networks, cash pick-up points or informal couriers rather than bank transfers reinforcing dollarization while weakening financial intermediation.
Remittances keep consumption afloat. They prevent a sharper collapse in living standards. They provide liquidity in a dollar-starved economy. But the model carries systemic risks. Nearly half of remittance inflows originate in Gulf Cooperation Council countries (48 per cent), making Lebanon exposed to labor market shifts in the Gulf. Any tightening of cross-border cash controls, regional escalation, or downturn in host economies could quickly disrupt flows.
Moreover, a cash-heavy, privately financed economy is difficult to regulate and largely untaxed. It stabilizes households but weakens state capacity. It cushions shocks while entrenching informality. In effect, the diaspora keeps Lebanon afloat but on a fragile platform.
Remittances have become both a lifeline and a structural dependency: indispensable for survival, yet insufficient to restore economic sovereignty or rebuild institutional trust.
