Tuesday, December 17, 2019

When discussing Lebanon with those who only follow the general contours of what’s going on, you often hear the questions: what went wrong, how long have there been problems, and why weren’t they resolved before? In light of the weeks of demonstrations, now turning violent; the inability of President and Parliament to name a new Prime Minister; and the continued lack of a meaningful dialogue to repair Lebanon’s dislocated economy and political system, recent statements and reports clearly point out additional support for the negative public perceptions of the government held by the Lebanese people, well in advance of the October 17 people’s revolution.

The statement by the International Support Group for Lebanon reinforced messages that have been evident since the Arab Barometer reflected di...

Wednesday, December 4, 2019

The saga of Lebanon’s economic derailment is well known, having achieved global prominence both because of the extent and quality of the national demonstrations and intense expressions of concern from the international community. A recent policy paper called the government’s policy of financial engineering a “Ponzi scheme,” and critics are now focusing much of their ire on the Central Bank as access to their accounts are severely constrained and businesses are closing because they cannot secure enough US dollars to keep operating.

Word came yesterday that some progress is being made on the issue of a “clean” government, one that does not include political figures. According to a Reuters story, the caretaker Prime Minister Saad Hariri has nominated Lebanese businessman Samir al-Khatib to hea...

Monday, December 2, 2019

Although Lebanon was able to meet its November $1.5 billion Eurobond payment, there is a general consensus that Lebanon’s public debt has spiraled out of control. It needs to be reduced both as a share of GDP and in absolute amount. There is a great deal of apprehension that Lebanon may not be able to meet the next bond payment of $1.2 billion due in March 2020. It is evident that the public debt cannot be put on a sustainable path without a major policy adjustment in parallel with a massive, if at all bearable, fiscal effort.

Several experts have mentioned the inevitability of “Debt restructuring,” the conventional approach advocated to address the debt overhang. Restructuring entails: rescheduling, i.e. postponing, debt payment installments; lowering interest payments; and most distressin...

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