Public Debt-USD 100 billion in Next three years
Emergence and evolution
Lebanon emerged from the debris of the Civil War exhausted and tormented. Yet, the state’s debts at the time, early 1993, did not exceed LBP 5500 billion or roughly USD 3.2 billion, according to the average dollar to Lebanese pound exchange rate
which was LBP 1712. The different governmental policies adopted since then have only led to enlarge borrowing and the public debt stood at the end of 2014 at USD 66.6 billion.
which was LBP 1712. The different governmental policies adopted since then have only led to enlarge borrowing and the public debt stood at the end of 2014 at USD 66.6 billion.The successive governments have expanded public spending for several purposes including payrolls, social services and infrastructure projects, although the annual expenditure earmarked for construction does not exceed USD 7 billion. Unfortunately, most of the expenditure has proved to be futile.
The cost of high interest rates has had a substantial impact on the swift growth of public debt, reaching in certain years (1995-1998) roughly 40%.
Table 1 illustrates the evolution of public debt and interest payments between 1993 and 2015. Based on the rise in public debt recorded in the past years, it is likely that the public debt will reach USD 100 billion by 2018. Most striking is that the total amount of interest paid on public debt between 1993 and 2015 reached LBP 88925 billion i.e. 88.5% of the debt.
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Composition of public debt
In early 1993, public debt totaled LBP 5500 billion, 92.2% or LBP 5070 billion of which were in local currency and 7.8% or LBP 430 billion in foreign currencies (US dollar in particular). Over the years, borrowing in foreign currencies started to rise, accounting in early 2015 for roughly 41% of the total public debt as illustrated in Table 2.
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Creditors
The identity of the state’s creditors has changed drastically between 1993 and 2015 as illustrated in Table 3.
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