The budget deficit is forecast to remain large, adding to Lebanon's debt burden, with debt interest payments accounting for roughly one-third of government spending. The deficit narrowed to an estimated 5.4% of GDP in 2010 owing to tax revenue growth from a booming economy at a time of reduced expenditure, partly because of the time lag in payments for fuel and partly because of delayed expenditure resulting from the failure to pass a 2010 budget. In 2011-12, as delayed spending is implemented and revenue growth slows, the deficit is forecast to widen once more, to an average of 7.7% of GDP, which is L£5.2trn (US$3.5bn).

Much of the government's foreign debt is held by local banks, and debt servicing is in effect a form of government support to the banks-which means that Lebanon is unlikely to face contagion from debt crises elsewhere, despite having a large structural deficit and one of the world's highest debt/GDP ratios. In turn, the banks' heavy exposure to the government, and the high interest rates on offer, encourages them to keep buying government debt.