In Lebanon, All Roads Lead to Austerity

Lebanon is facing a Herculean task to escape its economic malaise. For decades, Lebanon has maintained a hefty current account deficit to finance substantial government spending, much of which funds a social safety net that keeps the sociopolitically diverse country from falling apart. But plummeting consumer sentiment, slowing capital inflows, and the threat of more Iran-linked sanctions are deepening economic fragility and driving home the unsustainability of such government spending. In its recently passed 2019 budget and under-discussion 2020 budget, the government has agreed that austerity measures are the solution to trim government spending. But forcing austerity measures upon Lebanon will fundamentally disrupt the country's social safety net, thus damaging the political ties between citizens and their political patrons. As Lebanon moves forward with austerity, popular unrest and a weakened government are all but guaranteed. ...