Lebanon to Default on Eurobond Debt for First Time
Lebanon on Monday was slated to default for the first time on its Eurobond debt, as the country’s financial crisis continues to spiral out of control. Beirut, which has been rocked by monthslong anti-government protests, was scheduled to repay a $1.2 billion Eurobond, while another $700 million matures in April and an additional $600 million comes due in June. Lebanese Prime Minister Hassan Diab explained that the decision to suspend payment was made as the nation’s foreign currency reserves had fallen to “a worrying and dangerous level.” Diab nevertheless said, “The Lebanese state [would] seek to restructure its debts, in a manner consistent with the national interest.” Diab came to power in January following a nationwide uprising demanding the complete overhaul of what many consider an elitist and corrupt political system. Some analysts predict Beirut’s decision could backfire by increasing pressure on Lebanese lenders while causing friction with foreign creditors. Diab last month met with a delegation from the International Monetary Fund to discuss the financial crunch but he has yet to formally request a bailout. Lebanon’s debt burden is one of the highest in the world at nearly 170% of gross domestic product.