Analysis of 2023 and Outlook for 2024

Outlook for 2024

As the year draws to a close, LIMS, in its annual evaluation, has cast its eye on the economic landscape, delineating an assessment for 2023 and painting a preliminary outlook for 2024. The initial half of 2023 witnessed a persistent depreciation of the Lebanese pound, shedding 50% of its value. The central bank, under former management, engaged in extensive unbacked Lebanese pound printing to cover deficits and reimburse dollar deposits. However, an aspect of stability occurred as the currency settled at approximately 89,000LL to USD under the stewardship of the newly appointed acting governor of the central bank, who curtailed money creation and terminated state financing. Another noteworthy development transpired with the timely submission of the 2024 budget—an unusual punctuality that has been amiss for an extended period. Despite the draft’s absence of substantial reforms and its misguided reliance on increasing taxes, the adherence to constitutional deadlines is a positive signal.

On a less optimistic note, the war in Gaza cast a pall over Lebanon in the waning months of 2023, particularly impacting sectors such as tourism and commercial activities. The repercussions of this war will endure into 2024 if the conflict persists. In the case of a wider conflict, the astronomical costs in term of human lives and infrastructure damage could irreversibly cripple Lebanon’s prospects of recovery. Concurrently, the failure to discover offshore resources post-drilling, despite premature political proclamations, added to the string of setbacks.

On another side, Moody’s maintained Lebanon’s credit rating at C and the outlook has been revised from negative to stable. LIMS explained that the C rating given to Lebanon by Moody’s is the lowest possible for a borrower and means the probability of lenders recovering their debts to the Lebanese state is very low. The persistent lack of reforms and the government’s inability to achieve a balanced budget undermines Lebanon’s capacity to service debts. The ongoing instability, including the prevailing war and economic pressures, casts a shadow over any imminent improvements in Lebanon’s credit rating.

  • Fears of the expansion of the security crisis and its potential negative impact on the Lebanese economy, December 4, 2023: Janoubia, TV Interview AR
  • Approval Of Daily Financial Incentives For Public Sector Employees And Two Additional Salaries, December 6, 2023: VDL, TV Interview AR
  • Do strikes in solidarity with Gaza affect the economy? December 12, 2023: Al Jadeed, TV Interview AR
  • Why Does Lebanon Remain at the Bottom of Moody’s Credit Ratings? December 19, 2023: VDL, Radio Interview AR
  • Mad Is He Who Does Not Acknowledge… Lebanon Will Not Rise From The Comprehensive War, December 21, 2023: Lebanese Forces, Article AR
  • The Most Prominent Challenges Faced By The Lebanese Economy In 2023 And The Repercussions Of The War In The South And Its Impact On The Dollar, December 28, 2023: Lebnan News, TV Interview AR 
  • Path Of the Lebanese Pound: How Did The Currency Decline By 30% In 2023 And Has Stability Begun? December 29, 2023: VDL, Radio Interview AR