Chairman of Lebanese Banks Calls for ‘Orderly Rescheduling’ of Debt

  • Economics
Chairman of Lebanese Banks Calls for ‘Orderly Rescheduling’ of Debt

The Chairman of Lebanon’s Association of Banks called Wednesday for an orderly rescheduling of a $1.2 billion Eurobond due on March 9.

“If the government is heading toward debt rescheduling, then this rescheduling must take place in an orderly manner,” Salim Sfeir told Prime Minister Hassan Diab, according to a press statement from Sfeir’s office.

He added that negotiations must take place with holders of debt securities, especially foreign investment funds who so far “have shown readiness to negotiate on this basis.”

Discussions are underway in the run up to March 9, when Lebanon is scheduled to repay the first of three Eurobonds which hit maturity this year. A further $700 million and $600m are due in April and June respectively.

The Lebanese government has consistently reassured investors that it will not default on any of its sovereign debt, which currently stands at around $86 billion, 150% of GDP. So far, Lebanon has never defaulted on its debts.

But restructuring the March repayment now seems inevitable.

“This is not about being pro or anti default. For me, it was an inevitable thing. If we pay now, by 2021, early 2022 at best, we would have run out of reserves,” Mohamad Faour, postdoctoral research fellow in banking and finance at University College Dublin told Al Arabiya English.

Faour’s prediction assumes zero dollar inflows into Lebanon.

“The earlier you [restructure] and admit that you’re in trouble, the better,” Faour continued.

Source: Al Arabiya