Lebanon

THE OFFICIAL ECONOMY IN THE MID-1980s

Business in Beirut, in one form or another, managed to continue throughout years of civil strife
Courtesy Mokhless Al-Hariri/The Georgetown Design Group, Inc.

Balance of Payments

Before the early 1900s, Lebanon generally had a balance of payments surplus. After that, however, the balance of payments situation fluctuated considerably. In 1983 the Central Bank reported a deficit of US$933 million; a year later, the deficit was set at about US$1.4 billion. But in 1985 there was an overall current account surplus of US$381 million as Central Bank foreign assets rose and the government purchased fewer weapons. Progress was not maintained, however; by the end of May 1986, the Central Bank estimated a US$407 million deficit, comprising a US$583 million Central Bank shortfall and a US$176 million surplus at the commercial banks. Central Bank governor Edmond Naim complained that the shortfall was caused by pressure from the government to finance runaway public expenditure and a failure to do anything about the state's withering revenue base.

Public debt soared as the government's formal revenues sources- -taxes and customs receipts--dried up. In 1984 the government spent about US$1.6 billion more than it obtained in revenues. The deficit had to be financed by borrowing US$840 million from the Central Bank and by selling treasury bonds. In 1985 the situation deteriorated even further, and by August the Chamber of Deputies approved a budget based on US$611 million in government revenues. However, state revenues that year amounted to only US$224 million. The principal reason for the deficit was the persistent failure to secure receipts from customs duties. Public debt reached US$931 million by the end of 1986, and by the end of March 1987 it totaled US$883 million.

Data as of December 1987