Lebanon had announced it cannot meet its debt payments and halted a March 9 bond payment of $1.2 billion on Saturday, setting the heavily indebted state on course for a sovereign default as it grapples with a major financial crisis.
“OUR DEBT HAS BECOME GREATER THAN LEBANON CAN BEAR”
In a televised address to the nation, Prime Minister Hassan Diab said foreign currency reserves had hit a “critical and dangerous” level and were needed to meet basic needs. He called for “fair” negotiations with lenders to restructure the debt.
The default will mark a new phase in a crisis that has hammered the economy since October, slicing around 40% off the value of the local currency, denying savers free access to their deposits and fuelling unemployment and unrest.
The crisis is seen as the biggest risk to Lebanon’s stability since the end of the 1975-90 civil war.
“How can we pay creditors abroad when the Lebanese cannot get their money from their bank accounts?” Diab said. “Our debt has become greater than Lebanon can bear, and greater than the ability of the Lebanese to meet interest payments.”
With a $1.2 billion bond due on Monday, Lebanon’s announcement sets the stage for its first sovereign debt default.