Lebanon Reforms Its Economy as It Faces Large Debt

Lebanon starts to fix its frail economy following years of stagnant phase in decision-making. Yet, this also helps inhibits further growth of the debt before it becomes too big to control.

The new president, Michel Aoun who was elected last year, after years without a leader, approved just last week regarding the increase in sector pay increases and a tax hike to support the cost. This was in line on the government’s plan to adjust its prospects for Lebanon to strengthen from adverse conditions. The country's debt largely intensified since Syria’s civil war that started in 2011.

Although, the finance ministry commented that this will have a minimal impact to the fiscal balance or the debt concern. The country is ranked as the third highest debt-to-GDP ratio which has been the main rationale why Moody’s agency has pushed the credit rating very low.

Economists are hoping for other reforms to raise revenue and cease the debt from rising more that includes approval of the budget, improve the electricity sector which is copiously subsidized, increase fuel tax and tax collection and boost the investment environment.