Lebanon battles financial crisis
NEGOTIATIONS to restructure Lebanon’s foreign currency debt should not last more than nine months if well-intentioned, the economy minister was quoted as saying, after the heavily indebted state said it could not meet its debt repayments.
Lebanon is set to default on its sovereign debt after declaring it could not pay forthcoming maturities – the first of which is a $1.2 billion (R18.8bn) bond due today. The state has called for restructuring negotiations.
The country is grappling with a major financial crisis which came to a head last year as capital inflows slowed and protests erupted over decades of state corruption and bad governance.
The default will mark a new phase in a crisis that has hammered the economy since October, slicing around 40% off the value of the currency, denying savers free access to their deposits and fuelling unemployment and unrest.
Face-to-face negotiations between Lebanon and bond holders are expected to begin in about two weeks, a source familiar with the matter told Reuters yesterday.
Prime Minister Hassan Diab said foreign currency reserves had hit a “critical and dangerous” level and were needed for basic imports.