BELIEF, أزمة الدين, العجز المالي, الملخص الاقتصادي

Lebanon’s 2026 Budget Highlights a State Strained by an Oversized Public Sector

15:56 | 31 تشرين الأول 2025LIMS output
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The 2026 draft budget largely mirrors last year’s fiscal framework, with projected revenue increases driven by prospects of improved tax collection and broader compliance. This budget comes at a time when public sector employees are intensifying sit-ins and threatening civil disobedience as they demand wage adjustments to offset the collapse of their real incomes.

LIMS explained that while these grievances reflect economic hardship, the state simply lacks the capacity to finance another round of salary adjustments. With salaries and associated benefits accounting for the vast majority of total expenditures, the state’s finances are effectively captured by an inflated and low-productivity bureaucracy. Additional wage hikes would deepen the deficit, fuel monetary expansion, drain foreign exchange reserves, and further erode the very purchasing power employees are seeking to protect.

LIMS added that any future adjustment to public salaries must be linked to productivity gains; it cannot be granted across the board to all employees equally. Lebanon cannot continue rewarding underperformance. On the contrary, individuals hired through political patronage, sectarian allocation of posts, and hiring practices detached from economic need should be dismissed. These long-standing practices have produced a civil service far larger than the country’s fiscal base can sustain.

Regarding the high cost of living, LIMS stressed that the solution is not raising salaries but dismantling public monopolies in electricity, water, telecommunications, and waste management—sectors where entrenched monopolies keep costs high and quality low. Opening these markets to competition is essential to reducing the cost of living, improving service delivery, and generating new employment opportunities.

Such measures would represent a sharp departure from Lebanon’s long-standing political economy, in which public employment has functioned as a social safety net and a tool of political loyalty rather than an instrument of effective governance. Yet without breaking this cycle, the budget will remain a symbolic exercise: a document that acknowledges the country’s crisis while leaving untouched the structural distortions that make recovery impossible.

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