The data released by the Ministry of Finance (MoF) recently indicated that Lebanon’s gross public debt hit $101.08B in April 2022, thereby recording an annual increase of 3.4% YOY.
The rise is mainly attributed to the annual increase in both local and foreign currency debt by 0.97% and 7.37%, respectively. In details, debt in local currency (denominated in LBP) stood at $61.5B in April 2022. As such, domestic debt constituted 60.84% of the total public debt.
Meanwhile, total debt denominated in foreign currency (namely in USD) reached $39.58B over the same period. In turn, total foreign debt grasped a stake of 39.16% of the total public debt by April 2022. It is worth mentioning that $10.03B represents the unpaid Eurobonds, their coupons and accrued interests, due to the default on government Eurobonds in March 2020.
Looking at net domestic debt, which excludes public sector deposits with the central bank and commercial banks, it decreased by 5.14% YOY to $47.47B in April 2022. As a result, the public deposits are estimated at $14.03B, amassed to cover increasing social assistance payments to public employees.
Table 1: Gross public debt throughout the last three years:
|Gross public debt ($/ M)||Gross Public Debt (B/ LBP)||EOP Market Exchange rate|
The above table indicates that gross public debt has been following an increasing trend throughout the years; rise from $92.87B in April 2020 to $101.1B in April 2022 (based on official exchange rate of 1507.5). This jump has happened as in March 2020 the country has defaulted on foreign debt and stopped paying interest and maturing principal, in addition, since January 2021 the MOF has stopped paying interest on BDL holdings of domestic TBs. In fact, the increase in public debt is mostly due to the rise in arrears. On the other hand, during that period, the LBP exchange rate against the USD depreciated from 3,700 to 26,650, rendering the real value of at least the domestic debt way, way down.
Table 2: Domestic and Foreign Debt by April 2022 ($B)
Source: MoF, BLOMINVEST Bank