Lebanon’s parliament has voted to elect Army Chief Joseph Aoun as the new president, ending over one year of political deadlock and raising hopes for economic recovery. This election, held after 12 unsuccessful attempts to choose a leader, signifies the first time the country has filled the presidency since 2022, amid dire economic crises and political paralysis.
The election has resulted in significant market responses. Lebanese government bonds, which have been underperforming and reported to be among the lowest globally, extended their rally from the past three months. According to sources, these bonds nearly tripled their value since September, coinciding with the regional easing of tensions involving the Lebanese armed group Hezbollah and Israel.
Bondholders expressed optimism following Aoun's election, with one fund manager describing the outcome as "a very positive development" amid shifts resulting from the ceasefire with Israel and backing from various nations, including Saudi Arabia, the UAE, France, and the United States. Ted Pincus, from the Switzerland-based fund Mangart, noted, "We expect the government formation to be relatively quick so they can start to work on reforms toward a deal with the IMF and banking sector restructuring." He added, "Lebanon's future now looks a lot brighter" with international economic support potentially on the horizon.
Joseph Aoun, now faced with the challenging task of stabilizing the country, will need to appoint a prime minister and construct a cabinet capable of retaining parliamentary support. This development is viewed as the beginning of Lebanon's path to recovery after years of economic stagnation exacerbated by the financial collapse of 2019, which the World Bank estimates resulted in $8.5 billion of damage.
While the election was marked by moments of hope, it also highlighted the continuing influence of Hezbollah as Aoun struggled to secure enough votes initially. The military group remains a significant political force within Lebanon, and the voting process demonstrated its potential to impact future government dynamics.
Financial analysts caution, though, as Hasnain Malik from Tellimer stated, Aoun’s victory is merely "the first necessary step on a very long road to recovery." He highlighted the importance of appointing the right prime minister and forming a government adept at pushing through necessary reforms, which have languished for years.
With the newly elected president taking office, many Lebanese citizens hold onto hope for rapid governmental changes and necessary reforms to revive the nation's economy. The government will have to work diligently to restore confidence among both local and international stakeholders.
This election is poised to be not just a political change but the beginning of Lebanon’s chance to quench its economic woes, dependent on the newly formed government’s ability to navigate complex local politics and regional dynamics.
While optimism surrounds Aoun’s presidency, Lebanon's economic situation remains fragile. The hope is not only for immediate recovery but for long-term stability and growth, which will deeply depend on the newly elected officials' capacities to work cohesively and garner broad support.