The data released by the Ministry of Finance (MoF) recently, indicated that Lebanon’s gross public debt hit $97.77B in April 2021, thereby recording an annual increase of 5.3%.
The rise is mainly attributed to the annual increase in both local and foreign currency debt by 4.19% and 7.11%, respectively. In details, debt in local currency (denominated in LBP) stood at $60.91B in April 2021. As such, domestic debt constituted 62.30% of the total public debt.
Meanwhile, total debt denominated in foreign currency (namely in USD) reached $36.86B over the same period. Therefore, total foreign debt grasped a stake of 37.70% of the total public debt by April 2021. It is worth mentioning that $7.39B represents the unpaid Eurobonds, their coupons and accrued interests, due to the default on government Eurobonds in March 2020, which helped shrink the economy by 25% in 2020.
Looking at net domestic debt, which excludes public sector deposits with the central bank and commercial banks, it increased by 1.07% YTD to $50.04B in April 2021.
Moreover, one of Lebanon’s highest economic burden is the spending on electricity, however, Lebanon can’t afford to keep the lights on during the recent months. As a result, reforms should focus on the financial sector, public finance, governance, corruption and loss-making utilities that have contributed to a surge in debt, as explained by the director of the IMF’s Middle East and Central Asia Department.
Domestic and Foreign Debt by April ($B)
Source: MOF, Blominvest