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Public debt up with higher deficits

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Public debt up with higher deficits:
Gross: $85 billion.
Net: $76 billion.

Gross public debt increased seven percent year-on-year to $85.1 billion at the end of 2018, according to the Ministry of Finance (MoF).

Net total debt rose ten percent to $75.7 billion over the same period. Net total debt is calculated by subtracting from the gross debt, public sector deposits with the Central Bank (BDL) and commercial banks.

“Wider fiscal deficits in the context of weak economic activity and high interest rates have led to rapid accumulation of public debt, which increased to 152 percent of GDP in 2018,” the Institute of International Finance (IIF) said in ‘Lebanon: Time to Act’, a report released in February.

The gross local currency debt, which includes public sector deposits, stood at $51.6 billion at the end of 2018. Half of this debt was held by BDL while the share of commercial banks was 35 percent, according to MoF’s ‘Debt and Debt Markets’ report for the fourth quarter of 2018. The remaining 15 percent was mainly held by public sector entities.

Eurobonds accounted for 94 percent of the foreign currency debt, according to the MoF report.

Bank Audi said in its ‘Lebanon Economic Report’ for the last quarter of 2018, that the government must carry out adjustment reforms to reduce the debt-to-GDP and deficit-to-GDP ratios, which are among the highest in the world. Proposed reforms include austerity measures, efficient mobilization of domestic resources, enhancing tax collection, fighting tax evasion, reforming the electricity sector, and improving the business environment.

Reported by Shikrallah Nakhoul from Lebanon Opportunities.

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