Overcoming the debt trap in Lebanon: from a rent-based to a productive economy

Any proper understanding of the debt phenomenon in Lebanon requires a short historical review of how this huge amount of debt could have piled up. It is to be noted here that the Lebanese public debt stood at the equivalent amount of $2 billion at the end of 1992, representing approximately 50% of GDP at that time. By the end of 2006, this debt stood at the equivalent of $40.5 billion representing 200% of GDP. During this period of 14 years, the total fiscal deficit of the state and the public sector (without debt service, but including all reconstruction expenditures and expenses outside the budget) did not exceed the equivalent of $4.7 billion. This means that the cumulated annual amount of debt service during the period 1993-2006 reached the astronomic figure of $31.4 billion, while the capital of the debt at the end of 1992 ($2 billion) plus the fiscal