What impact will Lebanon’s looming debt crisis have on its society and economy?
Lebanon’s government is still negotiating the issue of Eurobonds maturing next week, with analysts saying that whatever the steps, Lebanon will face an even more agonizing economic downturn.
BEIRUT — Already beset by inflation, an economic recession and a lack of trust from large segments of the public, Lebanon’s month-and-a-half-old government is now also staring down a debt crisis ahead of a maturing $1.2 billion Eurobond payment due March 9. This payment marks the first of several deadlines that continue into April and June of this year, and makes up a part of the country’s total debt, which reached $90 billion at the end of 2019 — 150% of Lebanon’s gross domestic product (GDP). To address the looming payment, Lebanon has brought in the International Monetary Fund (IMF) for technical assistance, and has hired asset management company Lazard and the law firm Cleary Gottlieb Steen & Hamilton to advise it on a potential restructuring plan.
Prime Minister Hassan Diab said March 2 that a final decision on the Eurobond payment would be made March 6 or 7. The government has reportedly still been unable to reach a deal with bondholders, but some lawmakers and authorities have cited an orderly default as the preferred course of action, which would entail both a restructuring and rescheduling of Lebanon’s Eurobond debt.
