"The Crisis within Lebanon" by Logan W.

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In the little country of Lebanon something is occurring on a massive scale. No not pollution, not war, but a massive debt that keeps on increasing year after year and will eventually lead this country to destruction if not changed now.

So what caused this staggering debt that Lebanon finds themselves in? There are two main reasons why; refugees and government overspending. While most countries today can handle refugees and be fine Lebanon is struggling. When the Syrian civil war started in early 2011 their debt was actually decreasing and their economy was improving, but with the flood of refugees coming in the debt has rocketed to its highest yet. With nearly one in four out of the 6 million population being refugees from the recent civil war in Syria alone it has become a major economic drain on the country. The country has also been misusing the money they do get and have actually been spending more than they are making.

It also does not help that tension in the middle east is at a constant high and with a recent attack on an oil tanker in Oman putting Lebanon in the “crosshairs amid escalating tensions between the Gulf countries and Iran.” This is because many representatives within Lebanon's government are part of the Iranian backed militant group called Hezbollah.

Recently the Lebanian economy debt has risen to 150% of its national GDP. Economic debt as a GDP is measured by investors to determine the country’s ability to make future payments. The S&P also predicts that this debt will continue to increase to 156% by 2021. The only thing that currently holds the country from falling apart is its diaspora, citizens of Lebanon that work and live around the world, who continue to put money into the countries banks.

Currently Lebanon can survive off their $40 billion in central reserves for about 13 months. So what could Lebanon do during this time to help them out of debt? While the country is receiving aid from countries like Saudi Arabia they still cannot get out of their massive debt from this alone. According to Marc Jones they can escape this debt one of two ways, grow out of the debt or drastically cut spending. While Goldman predicts a crucial 8% increase to be able to stabilize and pull out of the debt the country is only at a 2% increase. Ways investors have thought of to help bring in more money is by being stricter on tax collection and increasing interest rates. The other possible way, cutting spending, is easier, but as stated earlier the country is spending more than the GDP of the country. Lebanon is in major trouble and in is in many scenarios that are or will hurt them. If the government can't change the flow of refugees or fix the growth or spending the country will go bankrupt and collapse.

  1. How do you think Lebanon can fix its debt crisis?
  2. Can Lebanon get out of this crippling debt or will they go bankrupt? 
  3. Will the rise of tension in the middle east affect Lebanon’s ability to get out of debt?


Works Cited

Constable, Simon. “How Lebanon Will Dodge Its Looming Debt Crisis.” Forbes, Forbes Magazine, 13 June 2019, www.forbes.com/sites/simonconstable/2019/06/13/how-lebanon-will-dodge-its-looming-debt-crisis/#56dbd0fc66

Jones, Marc. “The Dire Debt Numbers Facing Lebanon's New Government.” Reuters, Thomson Reuters, 4 Feb. 2019, www.reuters.com/article/lebanon-bonds/the-dire-debt-numbers-facing-lebanons-new-government-idUSL5N1ZW62S.

.Trading Economics. “Lebanon Government Debt to GDP.” Lebanon Government Debt to GDP | 2019 | Data | Chart | Calendar | Forecast, 2019, tradingeconomics.com/lebanon/government-debt-to-gdp.


Comments

  1. AnonymousOctober 8, 2019 at 5:14 PM

    I am not sure that Lebanon can fix this massive amount of debt. I think the best thing for them to do is to try and slow it down and take it step by step. At the pace and rate that this country is going down, i feel like its more likely than not that they will eventually go bankrupt. I do think that their specific region and and geography does make it harder than other areas to make it out of debt. I believe that they are too unstable to make it out or start to lessen their debt.

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