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Towards a Sustainable Recovery for Lebanon's Economy

Author

Listed:
  • Ricardo Hausmann

    (Harvard's Growth Lab)

  • Ugo Panizza
  • Carmen Reinhart

    (Center for International Development at Harvard University)

  • Douglas Barrios

    (Center for International Development at Harvard University)

  • Clement Brenot

    (Center for International Development at Harvard University)

  • Jesus Daboin Pacheco
  • Clemens Graf von Luckner
  • Frank Muci

    (Center for International Development at Harvard University)

  • Lucila Venturi

Abstract

Lebanon’s current economic crisis ranks among the worst in recent history. GDP has collapsed by 38% in real terms. The Lebanese lira, which was fixed to the dollar in 1997, has lost more than 98% of its value on the parallel market. The government has defaulted on its debt, and depositors are unable to access their funds held at commercial banks. Consolidated public sector debt, including both government debt and commercial banks’ claims on the Banque du Liban (BdL), represents more than seven times the current GDP. Public services delivery has crumbled. In short, the country is undergoing a debt crisis, a banking crisis, a currency crisis, and a growth collapse. Four years into the crisis, a resolution remains elusive, and each passing day increases the economic and social burdens faced by the population. Given the increasing cost of delaying a resolution, we propose a strategy for Lebanon’s economic recovery that addresses all the dimensions of the crisis while recognizing the need to rapidly kick-start the economic recovery.

Suggested Citation

  • Ricardo Hausmann & Ugo Panizza & Carmen Reinhart & Douglas Barrios & Clement Brenot & Jesus Daboin Pacheco & Clemens Graf von Luckner & Frank Muci & Lucila Venturi, 2023. "Towards a Sustainable Recovery for Lebanon's Economy," CID Working Papers 439, Center for International Development at Harvard University.
  • Handle: RePEc:cid:wpfacu:439
    as

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    File URL: https://growthlab.hks.harvard.edu/sites/projects.iq.harvard.edu/files/growthlab/files/2023-11-cid-wp-439-lebanon-sustainable-recovery.pdf
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    References listed on IDEAS

    as
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    Keywords

    Lebanon; sovereign debt; international finance;
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