Lebanon’s fragile economic recovery risks being derailed by renewed political tensions unless leaders contain disputes sparked by the recent “Rawshe Rock” event and isolate their impact on the contentious issue of weapons outside state control, financial and economic officials warned.

Economists and bankers voiced concern that the fresh bout of infighting could erode the fragile stability that helped generate cautious optimism earlier this year when President Joseph Aoun took office and a new cabinet was formed. The momentum had begun to restore confidence after five years of crippling contraction and stalled talks with the International Monetary Fund.

“The return of growth was a turning point after a devastating period in which Lebanon lost nearly half of its GDP and accumulated more than $73 billion in financial losses,” a senior financial official told Asharq Al-Awsat. “Squandering this opportunity would destabilize the fragile equilibrium and drain the positive achievements of recent months.”

Lebanon’s GDP had collapsed from around $53 billion before the crisis to just over half that value, after the State defaulted on Eurobond payments in 2020, cutting the financial system off from international markets and unleashing a cascade of monetary, banking, and social breakdowns.

International institutions forecast growth of 2% to 3% this year, with Goldman Sachs projecting expansion of nearly 4% in 2026. Economists say further gains will depend on progress in reforms and on resolving the politically explosive question of disarmament.

The central bank has meanwhile stepped up efforts to strengthen oversight after Lebanon was placed on the Financial Action Task Force’s “grey list” last year. In coordination with the Special Investigation Commission, it has issued new measures to combat money laundering and terrorism financing, aiming to restore confidence in the financial system.

In a recent report, Banque du Liban noted that parliament had passed key laws in the first half of 2025, including amendments to banking secrecy and legislation on bank restructuring and loss distribution.

Still, officials warn that without stronger governance and State control of weapons, Lebanon risks undermining investor confidence and losing access to badly needed reconstruction funding.

“Restoring confidence requires reasserting the authority of the state and the army, with weapons exclusively in their hands,” the financial official said.

The issue will loom large when a Lebanese delegation travels to Washington in mid-October to attend the IMF and World Bank’s annual meetings and hold talks with U.S. Treasury officials and correspondent banks. The delegation will include Finance Minister Yassine Jaber, Economy Minister Amer Bisat, and Central Bank Governor Karim Souaid.