Formal debt restructuring talks between Lebanon and its bond holders are expected to begin in about two weeks, a source familiar with matter said on Sunday, after the heavily indebted state declared it could not meet its debt repayments.
Lebanon announced on Saturday it could not meet its debt payments, which include a Eurobond of $1.2 billion maturing on Monday, setting the state on course for a sovereign default as it grapples with a major financial crisis.
Addressing the Lebanese citizens on the eve of the Eurobond payments’ first maturity date on March 9, 2020, Prime Minister Hassan Diab announced Saturday evening that “the Lebanese government has decided to withhold the payments on the Eurobonds.”
“We are facing a considerable Eurobond debt repayment amounting to around 4.6 billion dollars in principal and interests in 2020, with the first installment due on March 9 (i.e. in two days from now),” said Diab.
“Faced with this major hurdle, we can only make a decision that protects the interests of our nation and our people,” he added.
“Our international reserves have reached critically low levels, forcing the Lebanese Republic to withhold all the payments on the Eurobonds that are due on March 9,” explained Diab.
“This decision was not an easy decision; it is the result of thorough assessments (including the financial and legal perspectives) of all available options at all levels,” he affirmed.
“Lebanon is a country that honors its commitments. However, the state is currently unable to pay its upcoming liabilities,” underlined Diab, adding, “In the light of this, the Lebanese government will seek to restructure its debts in a way that is consistent with the national interest, through a fair and good faith negotiation process with its creditors and adhering to best international practices.”
Source: Reuters and NNA
