Beirut, May 31 (IANS): The World Bank has warned that Lebanon will face significant challenges in running its state institutions and maintaining social peace if the country fails to undertake a comprehensive reform.

"Despite early warnings, Lebanon has lost precious time and numerous opportunities to adopt a path to reform its economic and financial system," Xinhua news agency quoted World Bank Mashreq Regional Director Saroj Kumar Jha quoted as saying in a statement.

"The cost of inaction is colossal not only on the daily lives of citizens, but also on the future of the Lebanese people," Jha added.

Failing basic public services, rising unemployment and severely dented human resources have become the "long-lasting scars" on the Lebanese economy and society because of the country's enduring crisis, the statement said.

"Assuming continued no policy reform, real GDP is projected to contract by 6.5 per cent in 2022."

The World Bank statement came less than a week after the Lebanese pound sank to a new historic low on the parallel market amid the country's unprecedented financial crisis.

The exchange rate of the Lebanese pound declined to 34,000 against the US dollar on May 24, down from the previously record low of 30,000 against the dollar less than a week ago.

Lebanon has been facing an unprecedented financial crisis in the past years amid a shortage of the US dollars caused by the political instability and deteriorating economy.