The International Monetary Fund (IMF) predicts that Lebanon’s public debt will reach 550% of its gross domestic product (GDP) by 2027 if the current situation persists, identifying it as the greatest risk facing the country.
The IMF report highlights that reform measures have not met expectations, and the delay in restructuring Lebanon’s financial sector has resulted in depositors losing $10 billion since 2020.
The IMF describes Lebanon as facing an unprecedented financial and sovereign debt crisis, with the economy contracting by 40% since the start of the crisis.
The Lebanese pound has lost over 98% of its value, inflation rates have reached unprecedented levels, and the central bank has lost two-thirds of its foreign currency reserves.
While the Lebanese economy experienced some stability in 2022, it continues to suffer from a severe recession. The significant deterioration in the exchange rate during the first quarter of 2023 has further dollarized the economy, accelerating inflation to 270% in April.
The IMF emphasizes that implementing a comprehensive economic recovery plan decisively will help gradually reduce imbalances and serve as a crucial foundation for policies aimed at restoring confidence and facilitating a return to growth.
However, it warns that the continuation of the current situation poses the greatest risk, with low levels of trust, increased cash dollarization, declining exchange rates, high inflation rates, and a growing informal sector making it challenging to generate public revenue.
