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Lebanon—Weathering the Perfect Storms

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  • Mr. Axel Schimmelpfennig
  • Mr. E. H. Gardner

Abstract

This paper reviews Lebanon's ability to manage financial pressures following severe shocks despite its large public debt overhang and significant external vulnerabilities. Based on interviews with market participants in Beirut and London, the paper concludes that Lebanon's ability to weather what appear to be "perfect storms" derives from three characteristics: a perceived implicit guarantee from donors; Lebanon's track record of having never defaulted on external debt or deposits; and the unique market structure for Lebanese debt which is dominated by local banks and "dedicated" investors and depositors.

Suggested Citation

  • Mr. Axel Schimmelpfennig & Mr. E. H. Gardner, 2008. "Lebanon—Weathering the Perfect Storms," IMF Working Papers 2008/017, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2008/017
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    References listed on IDEAS

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    2. Mr. Jonathan David Ostry & Mr. Abdul d Abiad, 2005. "Primary Surpluses and sustainable Debt Levels in Emerging Market Countries," IMF Policy Discussion Papers 2005/006, International Monetary Fund.
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    5. repec:rus:hseeco:123922 is not listed on IDEAS
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    7. Mr. Harald Finger & Mr. Mauro Mecagni, 2007. "Sovereign Debt Restructuring and Debt Sustainability: An Analysis of Recent Cross-Country Experience," IMF Occasional Papers 2007/003, International Monetary Fund.
    8. Steven B. Kamin, 2004. "Identifying the Role of Moral Hazard in International Financial Markets," International Finance, Wiley Blackwell, vol. 7(1), pages 25-59, March.
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    Cited by:

    1. Mora, Nada & Neaime, Simon & Aintablian, Sebouh, 2013. "Foreign currency borrowing by small firms in emerging markets: When domestic banks intermediate dollars," Journal of Banking & Finance, Elsevier, vol. 37(3), pages 1093-1107.

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