The year 2026 approaches Lebanon burdened with intertwined economic challenges, reflecting a transitional phase between fragile monetary stability and an unresolved structural crisis. The contrast between relative stability in exchange rates and monetary management on one hand, and persistent legal and financial deadlock over banking losses and depositors’ rights on the other, is likely to define the main economic narrative in the year ahead.

This reality does not signal genuine recovery, but rather a temporary management of the crisis that postpones its cost instead of distributing it transparently and fairly.

One of the core challenges in 2026 is restoring confidence - both domestically and internationally - a task that extends far beyond figures and indicators. The economy is no longer measured solely by growth or inflation, but by the state’s ability to establish a credible legal and institutional framework governing public finances, the banking sector, and depositors’ rights.

Despite the importance of unifying the exchange rate and adopting realistic rates for taxes and fees, these steps remain incomplete as long as deposits are excluded from a comprehensive settlement. Instead, they continue to be governed by temporary circulars that entrench uncertainty and weaken incentives for investment and savings.

A second challenge lies in the fragility of the anticipated economic improvement. International estimates point to the possibility of moderate growth and a gradual decline in inflation, yet these positive signals remain conditional on sustained monetary stability and continued external inflows. At the same time, the large current account deficit and chronic pressure on the balance of payments represent structural vulnerabilities, leaving the economy highly exposed to political or security shocks, or any decline in remittances and tourism revenues.

At the heart of the 2026 outlook is the fate of the proposed Financial Gap, Financial Regularization, and Deposit Recovery Law, approved by the Cabinet and referred to Parliament. Any delay in passing a clear law that defines the size of losses and establishes a fair, legally binding hierarchy for their distribution - beginning with shareholders’ capital - effectively prolongs paralysis in the banking sector and keeps the economy trapped in cash-based transactions. Beyond being a prerequisite for an agreement with the International Monetary Fund, this legislation has become a benchmark for Parliament’s ability to move from crisis management to genuine resolution within a binding legal framework.

Adding to these challenges, Lebanon has been placed on the 2026 Emergency Watchlist, alongside countries facing severe humanitarian crises such as Gaza, Sudan, Syria, Yemen, and Somalia. While Lebanon does not face the same levels of violence or disaster, its inclusion reflects a high degree of fragility and a real risk of sliding rapidly into a broader humanitarian crisis if exposed to additional financial, political, or security shocks. This designation places 2026 as a critical test of the country’s capacity to contain social and economic risks before they escalate into an uncontrollable crisis.

Ultimately, Lebanon enters 2026 at a decisive crossroads: either confront these challenges through transparent rules and bold legal commitments that convert apparent stability into sustainable recovery, or persist in ambiguity that produces fragile growth without confidence and without financing.