Key Takeaways

• Since it began on June 20, the Israel-Hezbollah truce has largely held, with limited escalation over the past month. Israel has, however, stepped up attacks around the Ali al-Taher hills outside Nabatieh, amid reports of a possible major offensive against an alleged Hezbollah compound there. According to Tel Aviv, Hezbollah has staged four attacks on Israeli troops since mid-June but has not claimed responsibility.
• The Trilateral Framework diplomatic track between Lebanon and Israel has stalled. The sides have yet to agree on how to implement the Framework’s proposed “pilot zones” initiative, under which Israeli forces would withdraw from designated areas and the Lebanese Armed Forces (LAF) would deploy to prevent Hezbollah from re-establishing an armed presence in those areas. Meanwhile, US-Iran diplomatic efforts have broken down, raising the risk that renewed regional conflict could once again include Lebanon.
• Lebanon recorded a nearly imperceptible drop in consumer prices in July (0.03%) – the second consecutive month of negative CPI change since mid-2019. However, year-on-year inflation remains high at 15.69%, with persistent price increases across most governorates and particularly a sharp increase in transportation costs driven by global fuel market disruptions.
• Public sector unions protested the government’s failure to fully implement salary adjustments approved in February: the disbursement of six additional monthly salaries for 260,000 workers, military personnel, and retirees has been delayed due to fiscal constraints. Meanwhile, Lebanese MPs approved a 67% pay increase for themselves, drawing widespread condemnation from civil society and media.
• Parliament passed a General Amnesty Law, under whose terms some 3,300 detainees will be released in the coming years, particularly nonviolent offenders and long-term pretrial detainees, while the sentences of other certain convicted individuals will be reduced. While the Law is expected to ease overcrowding in prisons, several political parties demanded that the eligibility criteria should be broadened.
• The appointment of the National Social Security Fund (NSSF) board is expected to advance implementation of the delayed 2023 pension reform, including operationalizing the measures needed for the regular dispersion of pension benefits and improving insurance fund governance.
• In response to persistent public sector arrears, Électricité du Liban (EdL) has cut electricity to public institutions and municipalities that are behind on their energy bills. With 192 public entities owing EdL around 218 million US dollars as of late 2025, the measure reflects EdL’s need to improve collection and maintain liquidity amid higher fuel costs.

By Crisis Analytics Team, Mercy Corps Lebanon