From Buying Time to Default

Lebanon’s sovereign default in March 2020 was the result of years of accumulated debt and delayed reforms. By 2018, public debt had reached $86 billion, while interest payments consumed nearly 47% of government revenues. The state relied on banks and Banque du Liban to finance its deficits and maintain the currency peg. In 2019, deposits fell by $12 billion, public debt rose to $91 billion, and confidence in the banking system collapsed. On March 7, 2020, Lebanon suspended payment on a maturing Eurobond, marking its first sovereign default since independence.