The data released by the Ministry of Finance (MoF) recently, indicated that Lebanon’s gross public debt hit $95.51B in November 2020, thereby recording an annual increase of 6.74%.
The rise is mainly attributed to the 6.74% annual increase in both local and foreign currency debt. In details, debt in local currency (denominated in LBP) stood at $59.67B in November 2020. As such, domestic debt constituted 62.48% of the total public debt.
Meanwhile, total debt denominated in foreign currency (namely in USD) reached $35.84B over the same period. Therefore, total foreign debt grasped a stake of 37.52% of the total public debt by November 2020. It is worth mentioning that $4.62B represents the unpaid Eurobonds, their coupons and accrued interests.
Looking at net domestic debt, which excludes public sector deposits with the central bank and commercial banks, it increased by 5.56% annually to $49.59B in November 2020.
It is worth noting that Fitch Rating has affirmed Lebanon’s Long-Term Foreign-Currency Issuer Default Rating at Restricted Default (RD) on August 20, 2020. Moreover, Lebanon’s foreign currency government debt remains in Restricted Default following the default on Eurobonds that matured on March 9, 2020.
Lebanon is suffering from an unprecedented financial crisis since October 2019. In fact, the economic policy that was adopted in the past, which relied mostly on foreign deposits in order to maintain the Lebanese Lira at a fix rate of LBP1507.5/$, has proved its limits. As a result, Lebanon has the highest debt-to-GDP ratio. The Lebanese economic vision must change, and the potential government should support sectors that can help Lebanon improve its GDP, and diversify the economy by adopting a clear plan to develop the local agriculture, industrial, and IT sectors.
Domestic and Foreign Debt in November ($B)
Source: MoF, BLOMINVEST Bank