Lebanon sets stage for default, declares can’t pay off sovereign debts



by   |  VIEW 432

Lebanon sets stage for default, declares can’t pay off sovereign debts

On Saturday, the 7th of March 2020, Lebanon, the Western Asian country bordered by Syria in the north and Israel in the south, which has been facing off its steepest financial crises since the civil war of 1975-1980, had issued a statement saying that Beirut would not be able to meet a $1.2 billion Government debt or bond payments scheduled to be matured on March 9th, settling the stages for a potential default of its sovereign credits as the heavily debt-strapped nation’s financial crises might sustain amid conflicting interests of the Lebanese Government.

In point of fact, Lebanon’s financial crises worsened over the past decade as the nation’s Government, which analysts often dubbed as one of the most corrupted among the Mideast nations, had heightened up public expenses to balloon its vote bank and increased public sector hiring, while as a consequential repercussion, nearly half of the nation’s entire GDP had been spent to cover public sector wages and the remaining were used to pay out debts.

Meanwhile, as the recent financial crisis in Lebanon, which has been rattling the centrepiece of the once-cherished nation’s stability, remarks a new magnitude of Lebanon’s financial predicament which has axed nearly 40 per cent valuation of its local currency since last October, in a televised address to the nation, Lebanon’s Prime Minister, Hassan Diab was quoted saying on Saturday (March 7th) that the nation’s FX reserves had hit a rock-bottom and a “fair” negotiation with the creditors would be required to restructure its debts, which the country had been piling up since the era of great financial depression by offering a higher interest rate in a bid to attract more foreign investments, while the rest of the world had been slashing rates to cushion their economies.