Public debt in Arab countries surged by nearly $142 billion at the close of 2023, reflecting the economic pressures exacerbated by regional instability, currency depreciation, and global economic challenges. Lebanon, along with war-battered Sudan, stood out as a primary driver of this sharp increase, the Abu Dhabi-based Arab Monetary Fund (AMF) said in the Unified Arab Economic Report for 2024. 

Lebanon’s financial woes intensified in 2023, as its total public debt ballooned to approximately $84.2 billion, up from $61.5 billion in 2022. This staggering rise pushed the debt-to-GDP ratio to an alarming 509.3%, highlighting the country’s deepening economic stagnation and structural challenges. The Lebanese economy showed minimal signs of recovery, with a real GDP growth rate of just 0.2% during the year.

The nation’s banking sector, once considered a pillar of economic stability, experienced a sixfold increase in deposits in local currency, the report noted. While this reflects some regained public trust, it also underscores the Central Bank’s efforts to stabilize a volatile financial system. However, Lebanon’s external debt remained a significant burden, amounting to $39.4 billion, with debt servicing costs rising to $4.9 billion in 2023.

Adding to these challenges, Lebanon faced persistent inflationary pressures, driven by the devaluation of the Lebanese lira and elevated import costs. Despite global trends of easing inflation, Lebanon’s rates remained high, reflecting its struggle to control economic instability.

Across the Arab world, public debt has become a growing concern, with total obligations climbing due to a combination of fiscal imbalances, lower oil revenues in some countries, and rising global interest rates. Lebanon is emblematic of broader issues facing the region, including political instability, insufficient structural reforms, and external economic shocks.

Tax reforms offered some respite in Lebanon, where revenues rose by 40.6% in 2023. These gains were driven by adjustments in customs exchange rates and the introduction of taxes on luxury items and property. However, such measures provided only a temporary boost, insufficient to offset the country’s deep-seated economic challenges.

According to the report, Lebanon’s ranking in the Logistics Performance Index (LPI) for 2023—82nd globally—illustrates its broader economic struggles. The decline in trade performance and inter-Arab commerce further underscores the obstacles facing the country’s economy as it navigates geopolitical tensions and weak domestic productivity.

The AMF report covers key economic developments in Arab countries during 2023, with a focus on the impact of global economic conditions on the region. It includes an integrated analysis of the performance of major economic sectors, such as oil and energy, public finance, foreign trade, and financial markets. In addition, it evaluates balance of payments, external public debt, and exchange rates, offering a clear view of the economic challenges and opportunities facing Arab countries.