## Lebanon—Weathering the Perfect Storms

_IMF Working Papers, January 1, 2008_

## Source details

**Canonical URL:** [Lebanon—Weathering the Perfect Storms](https://www.imf.org/en/publications/wp/issues/2016/12/31/lebanon-weathering-the-perfect-storms-21606)

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## Bibliographic details
- Authors: Axel Schimmelpfennig, E. H. Gardner
- Published: January 1, 2008
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451868791.001

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### Summary and central conclusion
- This paper reviews Lebanon's ability to manage financial pressures following severe shocks despite its large public debt overhang and significant external vulnerabilities.
- Based on interviews with market participants in Beirut and London, the paper concludes that Lebanon's ability to weather what appear to be "perfect storms" derives from three characteristics:
  - a perceived implicit guarantee from donors;
  - Lebanon's track record of having never defaulted on external debt or deposits; and
  - the unique market structure for Lebanese debt which is dominated by local banks and "dedicated" investors and depositors.

### Key findings and analysis
- Lebanon manages to sustain financing and avoid external debt or deposit default despite:
  - a large public debt overhang;
  - significant external vulnerabilities.
- Market perceptions play a central role:
  - Perceived implicit guarantee from donors supports confidence.
  - Historical record of never defaulting on external debt or deposits reinforces credibility.
- Market structure is a critical stabilizer:
  - Lebanese debt market is dominated by local banks and "dedicated" investors and depositors, limiting exposure to volatile foreign investor flows.

### Research approach
- Evidence is drawn from interviews with market participants in Beirut and London.
- The paper synthesizes qualitative market insights with an assessment of Lebanon’s debt and external vulnerability profile.

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## Content in this bundle

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/lebanon-weathering-the-perfect-storms-21606_