With 66 being the worst!
The Economist, an international weekly digital publication that centers on current affairs, politics, and the economy, has just released its May 2nd edition that includes a briefing on debt in developing countries.
Using four indicators of financial strength, the Economist ranked 66 emerging economies from safest to most distressed. “About 30 are in distress, or flirting with it,” says the report.
To no surprise, Lebanon is on that list as #65, right between Zambia and Venezuela which economy was ranked the weakest.
The indicators or “potential sources of peril” are (1) public debt, (2) public and private foreign debt, (3) cost of borrowing, and (4) reserve cover.
The pandemic has taken a toll on economies worldwide. Apparently, over 100 countries have asked the IMF for help. “It has already approved 40 of the quick, small loans it provides after natural disasters. Some countries are repeat customers,” the report says.
And now, Lebanon has finally agreed to seek a bail-out loan from the IMF of over $10 billion, according to PM Hassan Diab’s speech.
Hopefully, Lebanon doesn’t end up like Egypt (#37) that is already seeking more IMF help after just four years.
Lebanon will need to make reforms aimed at repaying the IMF. Horrible planning or failure to implement carefully thought-out plans will plunge the country deeper into recession.
Worth mentioning here that, in 1955, Lebanon ranked 8th with the highest GDP per capita: