The Case of Lebanon Bankruptcy

Default can be defined as the country’s inability to repay its debts. The accumulation of debts and the country’s inability to repay them can happen for many reasons such as political and economic instability, wars, wrong governmental policies, or pandemics. The default of a country means the depreciation of the currency, an increase in the inflation rate, increasing interest rates, lack of foreign and domestic investments, and increasing unemployment. In addition, the government cut public spending and stopped the public projects and funding the social programs. Lebanon became unable to repay its debts in the year 2020. Lebanon’s default happened due to several reasons. The purpose of the paper is to explain the reasons that led Lebanon to declare its default. Adding to that, this paper will discuss the main recommendations and policies that can be implemented for Lebanon to be able to get out of its economic crisis.