Saudi Press

Saudi Arabia and the world
Thursday, Aug 28, 2025

Lebanon succumbs to the highest debt-to-GDP ratio in the world

Lebanon succumbs to the highest debt-to-GDP ratio in the world

Beirut Port blast, coronavirus add up to an economic crisis which could see GDP fall from $55bn to $25bn in just two years

Lebanon’s gross public debt increased by 8.9 percent annually to $93.40 billion in the first half of 2020, according to the latest figures released by the Ministry of Finance.

And it could exceed $95 billion by the end of August, according to economist and banker Nicolas Chikhani.

Chikhani told Arabian Business that he believes Lebanon’s GDP will collapse from $55 billion in 2018 to $32 billion at the end of July to close to $25 billion by the end of 2020 after the tragedy of Beirut port explosion which destroyed hundreds of SMEs and destroyed the port through which 70 percent of the Lebanese economy is processed.

At this pace, the debt to GDP ratio will exceed 375 percent by the end of 2020, the world’s highest debt-to-GDP ratio ever, Chikhani said.



Japan has second highest national debt in the world at 234.18 percent of its GDP, followed by Greece at 181.78 percent.

The debt in local currency (denominated in LBP) stood at $58.60 billion by June, registering a growth of 9.62 percent year-on-year. Domestic debt accounted for 62.74 percent of total public debt, down from 62.62 percent last year.

“In order to alleviate the debt-to-GDP ratio, Lebanon will have to opt to the devaluation of its official currency rate by more than 50 percent, reducing its public debt to $55 billion, and its debt-to-GDP ratio to 220 percent,” Chikhani said, adding: “But this is not enough to achieve the OECD requirement and get a debt/GDP ratio below 80 percent.”

The failure to pay off foreign debt since last March, the collapse of the currency by 80 percent and foreign reserves by more than $8.8 billion, hyperinflation that surged to 112 percent by the end of July and the repercussions of the coronavirus and the Beirut explosion will make things worse especially if the Central Bank of Lebanon lifts subsidies within the next 2 months on food, oil and medicine, as expected, he told Arabian Business.



In April, Lebanon outlined a financial recovery plan including an indicative debt restructuring plan, but no agreement was reached with external or domestic bondholders.

A number of interlocking factors have been hindering progress, including the need to also restructure the banking sector and the balance sheet of Banque du Liban (BDL), the central bank, domestic disagreement between the newly-resigned government and the financial sector over the restructuring process, failure to secure an IMF deal and now the need for a new government.

Looking at net domestic debt, which excludes public sector deposits with the central bank and commercial banks, it rose 10.23 percent annually to $84.30 billion by June, the latest figures showed.

 

Debt denominated in foreign currency (in US dollars), it increased by 7.82 percent annually to $34.80 billion over the same period. As a result, total foreign debt held 37.26 percent of the total public debt by June, up from 37.65 percent last year.

Notably, $3.52 billion of the total debt represents the unpaid Eurobonds, their coupons and accrued interests. The government announced in March that it will refrain from making payments on all dollar-denominated Eurobonds as it seeks to negotiate an arrangement with its bondholders and discuss the restructuring of its debt.

Last month, S&P Global Ratings maintained the “selective default” rating for Lebanon’s long- and short-term foreign debt, after the country first defaulted in March. However, three more bonds were downgraded from “CC” to “D”.

Newsletter

Related Articles

Saudi Press
0:00
0:00
Close
After the Shock of Defeat, Iranians Yearn for Change
YouTube Altered Content by Artificial Intelligence – Without Permission
Iran Faces Escalating Water Crisis as Protests Spread
More Than Half a Million Evacuated as Typhoon Kajiki Heads for Vietnam
HSBC Switzerland Ends Relationships with Over 1,000 Clients from Saudi Arabia, Lebanon, Qatar, and Egypt
Sharia Law Made Legally Binding in Austria Despite Warnings Over 'Incompatible' Values
Dogfights in the Skies: Airbus on Track to Overtake Boeing and Claim Aviation Supremacy
Tim Cook Promises an AI Revolution at Apple: "One of the Most Significant Technologies of Our Generation"
Are AI Data Centres the Infrastructure of the Future or the Next Crisis?
Miles Worth Billions: How Airlines Generate Huge Profits
Zelenskyy Returns to White House Flanked by European Allies as Trump Pressures Land-Swap Deal with Putin
Beijing is moving into gold and other assets, diversifying away from the dollar
Cristiano Ronaldo Makes Surprise Stop at New Hong Kong Museum
Zelenskyy to Visit Washington after Trump–Putin Summit Yields No Agreement
High-Stakes Trump-Putin Summit on Ukraine Underway in Alaska
Iranian Protection Offers Chinese Vehicle Shipments a Cost Advantage over Japanese and Korean Makers
Saudi Arabia accelerates renewables to curb domestic oil use
Cristiano Ronaldo and Georgina Rodríguez announce engagement
Asia-Pacific dominates world’s busiest flight routes, with South Korea’s Jeju–Seoul corridor leading global rankings
Private Welsh island with 19th-century fort listed for sale at over £3 million
Sam Altman challenges Elon Musk with plans for Neuralink rival
Australia to Recognize the State of Palestine at UN Assembly
The Collapse of the Programmer Dream: AI Experts Now the Real High-Earners
Armenia and Azerbaijan to Sign US-Brokered Framework Agreement for Nakhchivan Corridor
British Labour Government Utilizes Counter-Terrorism Tools for Social Media Monitoring Against Legitimate Critics
WhatsApp Deletes 6.8 Million Scam Accounts Amid Rising Global Fraud
Nine people have been hospitalized and dozens of salmonella cases have been reported after an outbreak of infections linked to certain brands of pistachios and pistachio-containing products, according to the Public Health Agency of Canada
Texas Residents Face Water Restrictions While AI Data Centers Consume Millions of Gallons
Tariffs, AI, and the Shifting U.S. Macro Landscape: Navigating a New Economic Regime
India Rejects U.S. Tariff Threat, Defends Russian Oil Purchases
United States Establishes Strategic Bitcoin Reserve and Digital Asset Stockpile
Thousands of Private ChatGPT Conversations Accidentally Indexed by Google
China Tightens Mineral Controls, Curtailing Critical Inputs for Western Defence Contractors
OpenAI’s Bold Bet: Teaching AI to Think, Not Just Chat
BP’s Largest Oil and Gas Find in 25 Years Uncovered Offshore Brazil
JPMorgan and Coinbase Unveil Partnership to Let Chase Cardholders Buy Crypto Directly
British Tourist Dies Following Hair Transplant in Turkey, Police Investigate
WhatsApp Users Targeted in New Scam Involving Account Takeovers
Trump Deploys Nuclear Submarines After Threats from Former Russian President Medvedev
Germany’s Economic Breakdown and the Return of Militarization: From Industrial Collapse to a New Offensive Strategy
IMF Upgrades Global Growth Forecast as Weaker Dollar Supports Outlook
Politics is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
Japanese Prime Minister Vows to Stay After Coalition Loses Upper House Majority
President Trump Diagnosed with Chronic Venous Insufficiency After Leg Swelling
Man Dies After Being Pulled Into MRI Machine Due to Metal Chain in New York Clinic
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
"Can You Hit Moscow?" Trump Asked Zelensky To Make Putin "Feel The Pain"
Nvidia Becomes World’s First Four‑Trillion‑Dollar Company Amid AI Boom
Iranian President Reportedly Injured During Israeli Strike on Secret Facility
×