BEIRUT — An economic and financial crisis looms over Lebanon, the third-highest indebted country in the world in terms of debt-to-gross domestic product ratio, which stood at 151% in 2018.

“Given the large public debt … [Lebanon's] interest payments now exceed 9% of GDP,” the International Monetary Fund (IMF) said in a July report. The IMF also said, “Deposit growth in 2018 was the lowest since 2005 and the BdL [Bank of Lebanon] reserves have now decreased by around $6 billion since early 2018.”

The crisis comes with strict banking procedures. Lebanese banks imposed restrictions on deposits and capped withdrawals. They also suspended housing loans and froze transfers abroad. This led to a US dollar scarcity in the Lebanese market and increased its exchange price against the Lebanese pound. The dollar reached 2,400 Lebanese pounds at the money changers in late November, before settling between 1,980 Lebanese pounds and 2,000 Lebanese pounds in sales and purchases during the second week of December. The official rate, however, remained Dec. 20 at 1,507.5 Lebanese pounds on the Beirut Stock Exchange. 

Remarkably, the exchange rate in Syria also gyrated, hitting 1,000 Syrian pounds against the US dollar, while its value set by the Syrian Central Bank remained at 434 Syrian pounds.