In February, amid a flare‑up that would later become a new war in the Middle East conflict, Lebanon’s cabinet was still resisting calls for a new salary scale. Yet the parliamentary debate on the 2026 budget proved a turning point. Protestors were allowed into the chamber, compelling ministers to concede to a wage hike financed through a package of tax increases: higher VAT, fuel levies and container fees. Hezbollah’s entry into war in March is expected to generate two interlinked shocks: falling fiscal revenues due to the halt in economic activity and rising expenditures on displacement, emergency spending and debris removal.

For LIMS, the public salary hike of 2026 echoes the controversial 2017 salary‑scale law. The extra payroll costs pushed Lebanon’s deficit further out of control while the accompanying tax hikes failed to offset the loss of activity they themselves discouraged. In plain terms, higher taxes shrank government revenues instead of increasing them by curbing consumption and investment. Debt ballooned, banks and the central bank were requested to provide funding, culminating in 2019’s collapse and a sovereign default in 2020. The banking sector failed, central bank’s foreign‑reserve buffers vanished, and the pound plunged to historic lows.
 
Today, the only viable solution for Lebanon is to trim non‑productive public employment, expanded through political patronage that have left the public administration overstaffed. This would allow government to redirect resources toward performance without increasing taxes. During the 2019‑24 recession, many private firms went bankrupt, cut staff and shut down. The resulting hard adjustments paved the way for a rebound in 2025, lifting private wages. By contrast, the civil service stayed bloated and redundant agencies, funds and committees remained intact.
 
Widespread tax evasion costs Lebanon several billion dollars annually and creates an uneven playing field. Lawful firms bear higher costs while illicit entities gain a competitive advantage. Under current conditions, further tax hikes approved by parliament are more likely to hurt compliant companies, pushing some toward closure or encouraging evasion as a survival strategy. Closing these loopholes could be achieved through a low flat‑tax regime that broadens the base without adding burden on compliant businesses.
 
Early February saw Eurobond prices rise as the government resisted wage increases, sparking speculation that investor confidence was improving and international engagement might resume. However, the subsequent salary scale approval, followed by Lebanon’s entry into the regional conflict in March, change the rules.

• The Rise of “Eurobond”: A Sign of Real Recovery or Just Speculative Movement? February 2, 2026: Cafein Press, Article (AR)
• New Salary Scales Measured Against the Old Ones: Will the Outcome Change? February 2, 2026: Aljadeed, Video interview (AR)
• Economic Expert Patrick Mardini: The Finance and Budget Committee Committed a Major Sin Against Depositors! February 3, 2026: SBI, Article (AR)
• Will the 2017 Experience Repeat Regarding the Increase in the Salary Scale and Return to Financial Collapse? February 5, 2026: Addiyar, Article (AR)
• Today’s Conditions Are Worse Than 2017: No Funds for Salary Increases. February 10, 2026: Lebanon Debate, Article (AR)
• Price Increases Before Ramadan: Lack of Competition Laws Boosted Commercial Exploitation February 10, 2026: RLL, Audio interview (AR)
• Salaries and Wages in Lebanon: Held Hostage by the Crisis and the Equation Remains Unresolved. February 16, 2026: Al Liwaa, Article (AR)
• The Lebanese Government Raises Taxes Under the Cover of “Salaries”: Fears of a New Wave of Price Increases. February 18, 2026: Alhurra, Article (AR)
• The Reality of the New Taxes and Their Risks on the Purchasing Power of Lebanese Citizens. February 18, 2026: Sky News Arabia, Video interview (AR)
• Employees’ Strike in Rejection of Taxes: 60 Percent of Them Need to Be Laid Off. February 19, 2026: Al-Modon, Article (AR)
• Will the Sin of 2017 Be Repeated? February 20, 2026: MTV Lebanon, Article (AR)
• Increasing Taxes Before Restructuring the Public Sector Is an Easy Shortcut That Does Not Serve the Economy. February 23, 2026: VDL, Audio interview (AR)
• When Does the Decline in Cocoa Prices Reflect on Chocolate Prices? February 26, 2026: Alaraby, Video interview (AR)
• The 2026 Budget Under Pressure From War and Displacement: State Revenues at Stake! March 16, 2026: Annahar, Article (AR)
• The Aggression Led to Increased Spending and Declining Revenues. March 19, 2026: Addiyar, Article (AR)
• Exchange Rate Stabilization as a Measure of Success in Facing Spending Pressures in the 2026 Budget. March 25, 2026: Al Liwaa, Op-ed (AR)