High Debt, High Deficit: Lebanon’s Economic Woes Fuelling Protests

The resignation of Saad al-Hariri as Lebanon’s prime minister on Tuesday has plunged the country’s economy deeper into uncertainty as protesters continue to occupy public squares, calling for a clear-out of the entire political elite, the Financial Times reported. Banks remain shuttered for a second week amid fears that the unrest will trigger capital flight and a run on lenders by customers anxious about their dollar deposits. The Banking Association said they would reopen on Friday. “Given the uncertain political outlook, the risk of capital flight is very high, should banks open on Friday,” said Alia Moubayed, managing director at Jefferies International, a US investment bank. “Imposing temporary capital control before that [happens] is necessary, in order to contain further downside risks to the credit and avoid a serious public backlash against banks and the Banque du Liban [the central bank].” Read more