Skip to main content

Amid protests, Lebanon’s Cabinet faces difficult choices on public sector austerity

Analysts doubt that Lebanon’s Cabinet will be able to reduce the budget deficit and salvage the long-term health of the Lebanese economy without taking unpopular austerity measures, and not taking them would lead to an even more dire economic situation.
Lebanese President Michel Aoun heads the first meeting of the new Saad al-Hariri's cabinet at the presidential palace in Baabda, Lebanon, February 2, 2019. REUTERS/Mohamed Azakir - RC14542F8110

Lebanon is at a significant economic precipice — with its debt sitting at 150% of its gross domestic product (GDP) in 2018, its growth was limited to only 1% that year according to the World Bank. To avoid debt restructuring and the economic collapse that would likely accompany it, prospects for growth hinge on restoring confidence in the economy, unlocking a host of pledged foreign investments and tackling the country’s budget deficit.

Lebanon’s deficit amounted to 11% of GDP last year, and since April, the country’s Cabinet has been working to prepare what Prime Minister Saad Hariri has said would be the “most austere budget in Lebanon’s history” — but it has had little success so far. After missing several deadlines to prepare a draft budget, Lebanese leaders are reportedly now preparing to publicly announce on May 22 decisions on cuts to public wages, salaries and pensions, which represent the lion's share of expenditures that are available for reductions.

Access the Middle East news and analysis you can trust

Join our community of Middle East readers to experience all of Al-Monitor, including 24/7 news, analyses, memos, reports and newsletters.


Only $100 per year.