Lebanon’s gross public debt rose by 4.3 percent to $82.95 billion in the first six months of 2018 compared to $79.95 billion in the same period of last year, according to a recent report.
“In nominal terms, the gross public debt grew by $3.4 billion in the first half of 2018 relative to an increase of $1.6 billion in the same period of 2017.
“Debt denominated in Lebanese pounds totaled $47.8 billion at end-June 2018, down by 2.6 percent from the end of 2017 and up by 2.2 percent from end-June 2017; while debt denominated in foreign currency stood at $35.1 billion, constituting a growth of 15.5 percent from end-2017,” Lebanon This Week, the economic research publication of the Byblos Bank Group, reported.
In May 2018, the Finance Ministry issued $5.5 billion in Lebanese Eurobonds and exchanged them with LL8.25 trillion worth of Lebanese pound-denominated Treasury bills from Banque du Liban’s reserves in order to reduce the cost of debt servicing, which explains the growth in foreign-currency debt.
“Local currency debt accounted for 57.7 percent of the gross public debt at the end of June 2018 compared to 61.2 percent a year earlier, while foreign currency-denominated debt represented the balance of 42.3 percent relative to 38.8 percent at end-June 2017.
“The weighted interest rate on outstanding Treasury bills was 6.41 percent and that on Eurobonds was 6.73 percent in June 2018. Further, the weighted life on Eurobonds was 7.95 years,” the report said.
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Lebanon has suffered from chronic public debt since the early 1990s, as governments borrowed from banks to finance the state’s needs.
Lebanese commercial banks hold 40 percent of the public debt as at end-June 2018, relative to 47 percent of the total at end-June 2017.
“BDL held 48 percent of the Lebanese pound-denominated public debt at the end of June 2018 relative to 41.6 percent a year earlier, while commercial banks held 36.6 percent of the local debt compared to 43 percent at end-June 2017.
“Also, public agencies, financial institutions and the public held 15.4 percent of the local debt at end-June 2018 relative to 15.5 percent a year earlier,” the report said. It added that holders of Eurobonds and special T-bills in foreign currencies accounted for 93.9 percent of foreign currency-denominated debt holders at the end of June 2018.
