Lebanon is heading for the first default in its history. After a meeting at the presidential palace on Saturday, the head of state, the prime minister, the head of parliament, the finance minister and the governor of the central bank hinted that the state would not reimburse not a debt maturing on Monday. During the meeting, he was “unanimously decided to stand by the government in its debt management, but not to repay maturing debts“, Indicated the presidency at the end of the meeting.
On March 9, the state is to repay 1.2 billion Eurobonds – dollar-denominated treasury bills issued by the state, part of which is held by banks and the Central Bank. The government, currently meeting in the presidential palace, will have to decide in this direction, after weeks of negotiations on the payment or not of the debt. With the exception of the banks which recently called on the state to honor the deadline of March 9, most parliamentarians but also the street are demanding debt restructuring and urgent economic reforms.
Lebanon is crumbling under debt of around 170% of its gross domestic product (GDP), according to the international agency Standard and Poor’s (S&P), one of the highest ratios in the world. The over-indebted country has never failed in its commitments, however, the economic and financial situation has greatly deteriorated in recent years, with a slowdown in economic growth, a widening of the public deficit and a devaluation of the national currency on the market. parallel.
Since the beginning of 2019, international rating agencies have repeatedly lowered the country’s sovereign rating, now a few steps from the rating “D»Corresponding to a default in payment. In recent months, banks have imposed draconian restrictions on withdrawals and transfers, especially in dollars, in a country where the greenback is used daily like the Lebanese pound. The Lebanese pound has lost 40% of its value since the fall.
See also – Lebanon: from protest to crisis
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