Bank Audi sees
slight summer recovery

After sluggish second quarter

The economy improved slightly in the third quarter of this year after a very weak second quarter, according to Bank Audi's Lebanon Economic Report. Beirut airport arrivals fell 5.8 percent year on year, compared with a 44.4 percent drop in the second quarter. The United Arab Emirates lifted its travel ban and Saudi Arabia lifted its ban on Lebanese exports. Land exports to Saudi Arabia resumed on August 20. The real balance of payments showed a surplus of $844 million over eight months. Full-year 2025 had recorded $3.3 billion. Fresh deposits reached $5.65 billion in August.

The 2027 public budget proposal, ratified by the Cabinet, targets a zero overall deficit and a primary surplus of $173 million. Revenues and expenditures are set to grow 14 percent to $6.9 billion. VAT supplies 52 percent of revenues. Salaries take 68 percent of spending. The Ministry of Finance forecasts real GDP to contract 7.5 percent this year and grow 4.5 percent in 2027.

Liquid foreign reserves at the Central Bank (BDL) stood at $11.4 billion at end-September, down $498 million since December. BDL also contained currency in circulation to curb speculation.
Eurobond prices rose from 24 cents on the dollar in June to 30 in September. They have since slipped back to between 26 and 28.63 cents. Goldman Sachs called pricing near 29 cents overly optimistic.

The report said an IMF staff-level agreement remains highly challenging. Friction persists over the Bank Resolution Law. A Financial Gap Law is also needed. The report closed with a review of a currency board. It called the board a capstone to recovery, not a substitute.