Lebanon post-war reconstruction, pegged-currency regime, and 2019-2020 collapse

Doctrine — stated goals and content

Post-civil-war reconstruction programme launched under PM Rafik Hariri centred on: (1) Solidere — 1994 law creating a joint-stock company with expropriation powers to rebuild Beirut Central District, financed by compulsory share issuance to pre-war property holders plus sales to new investors; (2) a de facto Lebanese pound peg to the US dollar at ~1507.5 established from 1997, supported by high domestic interest rates and remittance-driven inflows; (3) large sovereign borrowing — public debt rose from ~50% of GDP in 1993 to >150% by 2006, among the world's highest; (4) a heavily bank-centric financial system whose balance sheet was dominated by claims on sovereign and on Banque du Liban; (5) extensive use by Banque du Liban from 2016 of "financial engineering" operations paying above-market rates to domestic banks for dollar inflows, effectively a Ponzi-adjacent structure to defend the peg without fiscal adjustment; (6) chronic electricity-sector losses at Electricité du Liban absorbed by the budget; (7) governance by sectarian quota under Taif, producing cabinet paralysis and blocked IMF-type structural reform repeatedly attempted (Paris I 2001, Paris II 2002, Paris III 2007, CEDRE 2018). The model collapsed in October 2019: protests triggered by a WhatsApp tax, bank runs, informal capital controls, sovereign default March 2020, and a currency collapse exceeding 95% against the dollar by 2023. IMF staff assessed 2020 output loss at ~25% — one of the sharpest non-war peacetime contractions on record.