Improving Public Debt Management
In the OIC Member Countries
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4.1.12 Lebanese Republic
A) Public Debt DynamicsWith a gross debt ratio amounting to about 139% of GDP (and a net debt amounting to about
131% of GDP) the Lebanese Republic had the highest debt ratio among all OIC member
countries in 2015. After general government debt had decreased from over 180% to 130% of
GDP between 2006 and 2012, debt started to increase again in 2013 and gross debt is
projected to reach about 148% of GDP in 2017 (see upper panel of Figure 433). Additional
liabilities (e.g. government obligations to the National Social Security Fund (NSSF), hospitals,
and private sector contractors) are estimated to equal between 3.9% and 7.8% of GDP (Credit
Libanais 2016). Even though the primary balance was positive in most years between 2006
and 2015, Lebanon’s net borrowing was often very high because of high interest payments. Net
interest payments were reduced from 13.9% of GDP in 2006 to 8% of GDP in 2013, but are
projected to rise to 11% of GDP in 2017.
Contingent liabilities in Lebanon arise from transfers to Electricité du Liban (EdL), the main
power utility of Lebanon, the National Social Security Fund (NSSF), and liabilities to the
commitment to the fixed exchange rate. Furthermore, contingent liabilities can result from
state owned companies heading towards privatization. Lebanon may be vulnerable to
contingent liability shocks since the size of its banking sector is large compared to the overall
economy (IMF 2015b).
B) Public Debt ManagementGovernance and Strategy Development
Legal frameworkIn 2008, the Lebanese government adopted the Public Debt Directorate Law (no. 17), which
aims at institutionalizing debt management functions at the Ministry of Finance (MoF). The
law allows the Lebanese government to issue new debt of up to $400 million. Additional
foreign currency issuances must be ratified by the budget or by a standalone law. All foreign
currency debt issuances are subject to authorization by a resolution of the Council of Ministers
and transactions are conducted by the MoF.
Organizational structure (incl. coordination with other policies)The mandate for public debt management is held by the Public Debt Directorate (PDD), a
division of the MoF. While the PDD is the primary institution regarding debt management,
other institutions are also involved in the debt management process: front office
responsibilities are held by the MoF (Eurobond issuances in foreign currencies), the Council
for Development and Reconstruction (bilateral and multilateral project loans in line with its
mandate) and the Banque du Liban (management of domestic debt auctions). Back office
responsibilities are held by the MoF (foreign currency debt) and the Banque du Liban
(domestic debt as well as bilateral and multilateral project loans). The coordination between
public debt management and monetary policy is institutionalized in the socalled High Debt
Committee (MoF 2014).
Debt reportingTo inform the public about the debt profile of the Lebanese government, the MoF publishes a
“Quarterly Bulletin about Debt and Debt Markets”. This bulletin includes detailed debt data
and is published online. The MoF also publishes auction calendars and auction results
regarding government bills and bonds as well as information on ratings and investments.