Lebanon’s 2026 budget: managing crisis

Lebanon’s 2026 state budget, set at around $6 billion, reflects a country struggling to maintain the basics of governance amid years of economic collapse. To put this in perspective, Lebanon’s budget in 2018 was nearly $17 billion, a drastic reduction highlighting both the shrinking size of the state and the economy itself.

At the same time, GDP has fallen from $55 billion in 2018 to less than $31 billion, according to the Ministry of Finance. This contraction translates directly into fewer public services, limited investment, and deeper financial strain on households.

Why the budget shrank

The decline in Lebanon’s budget is not random austerity. There are several structural factors:

- Weak economic activity: Years of political deadlock, financial collapse, and banking restrictions have reduced both domestic and foreign investment.

- Institutional fragility: Lebanon’s public sector suffers from inefficiency, nepotism, and lack of modernization, which hampers the state’s ability to generate revenue or manage funds effectively.

- Near-total absence of investment: Public and private investment has all but disappeared, leaving the economy dependent on shrinking revenues and aid.

Most of the budget remains operational, with nearly 50% allocated to public sector salaries. Investment spending, which could stimulate growth and modernize infrastructure, is extremely limited. Meanwhile, revenues are almost entirely dependent on taxes and customs duties, rather than efforts to expand economic activity or attract foreign investment.

What this means for Lebanon

In practical terms, Lebanon’s 2026 budget is designed to manage crisis rather than promote recovery. Without structural reforms, the state is caught in a cycle of shrinking resources and increasing demands.

- Public debt remains high, leaving little room for investment in infrastructure, education, or healthcare.

- Economic growth is stagnant, limiting job creation and discouraging innovation.

- Social impact is severe, as citizens bear the brunt of declining services, inflation, and limited opportunities.

The challenge is not simply balancing numbers, it is rebuilding trust in state institutions and creating a vision for sustainable growth.