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The road map argues that Lebanon no longer fits even the bottom of the speculative-grade scale. Six and a half years after the March 2020 Eurobond default, the sovereign, Banque du Liban and the commercial banks are insolvent at the same time and are each other's main creditors. Eurobond claims of USD 42 bn sit alongside a bank–BDL financial gap of USD 80–83 bn, so consolidated claims on the state approach 3.5 times GDP. The paper treats frozen deposits as internal public debt and notes that the restructuring perimeter, meaning whether depositors rank ahead of or alongside bondholders, has still not been defined.
The paper also shows why the usual ratios mislead in Lebanon's case. A 3.9% fiscal surplus reflects unpaid interest, and gross reserves of USD 11.7 bn are committed against depositor claims. Nominal GDP per capita hides a cash economy of roughly 45% of output. The March 2026 conflict is projected to cut GDP by 6.4% in 2026.
The road map treats Category 1 as unrealistic this decade and sets Category 2 as the target: a state that pays its debts on time and holds market access. It stresses that none of the other reforms can be financed until the debt perimeter is fixed and an IMF programme is in force.
Key findings
- Category 2 entry requires cutting consolidated public liabilities from about 350% of GDP to 90% or less, through a 65–75% Eurobond haircut with 15–20-year maturities.
- The deposit gap would be converted into senior, long-dated state and BDL securities: small depositors are repaid first in cash, and depositors as a group rank ahead of bondholders.
- Year 1 measures: the bank-resolution amendments, a financial-gap law with depositor priority, the income-tax law, a medium-term fiscal framework and activation of the IMF programme.
- Years 2–3 close the restructuring, recapitalise viable banks, unify the exchange rate under inflation targeting and corporatise Electricité du Liban.
- Abolishing the exclusive import-agency regime and activating Competition Law 281/2022 is identified as the fastest non-monetary lever on inflation, which is 17.5% in 2026.
- Years 3–5 aim for a primary surplus after debt service of 1–2% of GDP, a positive net reserve position, governance in the 20th percentile range and a small benchmark bond issue.
Summary of the paper; the full analysis is in the PDF.