Lebanon is one of the most indebted nations, its government debt is estimated at 155 percent of gross domestic product. The country imports vastly more goods and services than it exports, and the government budget deficit is set to increase too as a percentage of GDP this year.
Excessive government borrowing has inflated the politically well-connected banking sector that lends to the state at high interest rates. Banks prefer to lend to the government rather than finance innovative enterprises, depressing private-sector investment. The banks rely on wealthy Lebanese and especially the diaspora to deposit their money in Beirut. The enormous interest rates earned by these depositors flow into very few pockets: About 1 percent of all accounts are estimated to hold roughly half of total deposits.
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