AFP, Beirut :
Lebanon said Saturday it would default on its Eurobond debt for the first time and seek out restructuring agreements due to a spiralling financial crisis that has hit foreign currency reserves.
The country, hit by a severe liquidity crunch and months of anti-establishment protests, was due on Monday to repay a $1.2-billion Eurobond, while another $700 million matures in April, and a further $600 million is due for repayment in June. But Prime Minister Hassan Diab said that foreign currency reserves have fallen to “a worrying and dangerous level which pushes the Lebanese government to suspend payment” of the Eurobonds due on March 9.
Foreign reserves stood at $35.8 billion at end-February, according to the central bank.
“The Lebanese state will seek to restructure its debts, in a manner consistent with the national interest” through negotiations with creditors, Diab said in a live address.
Diab’s government was nominated in January to handle the economic crisis amid unprecedented protests that began in October demanding a complete overhaul of the political class.
He said a default – the first decision taken by his government – was the “only way” to stop reserves from depleting.
In taking this path, Diab’s administration is in effect overruling objections from banks who say it would pile added pressure on domestic lenders and compromise ties with foreign creditors.
Lebanon said Saturday it would default on its Eurobond debt for the first time and seek out restructuring agreements due to a spiralling financial crisis that has hit foreign currency reserves.
The country, hit by a severe liquidity crunch and months of anti-establishment protests, was due on Monday to repay a $1.2-billion Eurobond, while another $700 million matures in April, and a further $600 million is due for repayment in June. But Prime Minister Hassan Diab said that foreign currency reserves have fallen to “a worrying and dangerous level which pushes the Lebanese government to suspend payment” of the Eurobonds due on March 9.
Foreign reserves stood at $35.8 billion at end-February, according to the central bank.
“The Lebanese state will seek to restructure its debts, in a manner consistent with the national interest” through negotiations with creditors, Diab said in a live address.
Diab’s government was nominated in January to handle the economic crisis amid unprecedented protests that began in October demanding a complete overhaul of the political class.
He said a default – the first decision taken by his government – was the “only way” to stop reserves from depleting.
In taking this path, Diab’s administration is in effect overruling objections from banks who say it would pile added pressure on domestic lenders and compromise ties with foreign creditors.
