There has been a growing concern over Lebanon’s debt outlook. True, the fiscal deficit at end of Q3 2018 was twice that of 2017 for the same period. Two main factors contributed to its escalation: First, the wage and salary increases that were adopted during the last quarter of the 2017 budget and extended through the first three quarters of 2018, generated a rise in personnel costs of 21 percent; and second, the escalation in the debt service cost by 8 percent, reflecting both higher debt and higher interest rates. Bleak fiscal outlook Rates are likely to post a further rise as the latest treasury bill issues commanded an interest rate rise of 2.5 percent to reach 10 percent on the 10 year note. Shorter term rates rose by 1 percent to the range of 6-7 percent. Real rates, however, are near zero at the current inflation rate. Nominal rates
