Central Bank: Lebanon’s debt rises $1 billion

Lebanon’s total public debt rose to the equivalent of $33.9 billion by the end of February from $32.9 billion a month earlier, the Central Bank said in its monthly bulletin.

External public debt comprised $18.99 billion of the total. However, banking sources estimate the debt now stands at $35 billion. In official figures also released Saturday, the bank said Lebanon recorded a $777.4 million balance of payments deficit in the first two months of 2005, compared with a surplus of $203 million in the same period last year. It recorded a $784.6 million deficit in February alone. Banque du Liban said the deficit reflected a drop in its net foreign assets but an increase in those of banks and financial institutions.

Lebanon recorded a balance of payments surplus of $168.5 million last year, $3.38 billion in 2003 and $1.56 billion in 2002. Those surpluses were due in part to inflows spurred by an international aid summit in 2002, which yielded some $4 billion in soft loans to ease servicing on the public debt. Public finance reforms have since lagged because of a series of political crises, eroding confidence in the economy and the ability of the government to arrest the growth of its public debt.

Central Bank governor Riad Salameh said earlier this month that total bank deposits fell $1.5 billion after former Premier Rafik Hariri’s assassination, adding total deposits stood at $59 billion before the incident.

Lebanon’s public debt is among the world’s heftiest, at some 184 percent of gross domestic product – most of it accumulated in the 1975-1990 civil war. It consumes most government revenue.