Public finance in post-civil war Lebanon has been an instrument for systematic capture of the country’s resources, as it served the interests of an entrenched political economy. Excessive debt accumulation was used to give the illusion of stability and reinforce confidence in the macro-financial system for deposits to continue to flow in. Lebanon’s depression -deliberate in the making over the past 30 years- has hollowed out the state of the provision of basic services to its citizens.
The Lebanon Public Finance Report: Ponzi Finance?, released today, analyzes Lebanon’s public finances over the post-civil-war period to understand the roots of the system’s eventual -and widely expected- insolvency. It focuses particularly on three main elements: Fiscal Policy in the Second Republic; Macro-Financial Restructuring; and Public Service “Non-Delivery”. The findings identify (i) a systematic and acute departure from orderly and disciplined fiscal policy; (ii) missed opportunities to protect most depositors, in dollars; and (iii) a collapse in already weakened basic public services, putting in danger the social contract.
The report analyzes the impact of Lebanon’s erratic macro and structural policies on the “failed” provision of key basic services to the population. The current crisis aggravated long prevailing and serious gaps in the financing of those basic public services: Water, Electricity, Transport, Health, Education and Social Protection. The successive…
