Beirut, Weekly Report # 8, March 13th, 2020

Cronache dal Libano

by Yves

Most of the headline articles of the week have focused on the recent decision of the government not to pay the Eurobonds due on 9 March and on the measures taken to deal with the Coronavirus pandemic. The statement of Prime Minister Diab done last Saturday that Lebanon is not going to honor March deadline because of limited currency reserves has now left the door opened for the government to negotiate with the major Eurobonds owners. It is reportedly the first time in its history that Lebanon is in cessation of payment and the negotiation process might last from one to three months. The negotiation with the biggest foreign owner of Eurobonds which are Ashmore Group, Fidelity Investments and Goldman Sachs companies will have to be completed very quickly to avoid any deeper crisis. In addition, the Banque du Liban has requested the private banks to augment their own capitals of 20% up to 4,4 billions dollars ($) and to avoid paying dividends for this month. On Thursday 12, finance minister Ghazi Wasny has declared that it was not, strictly speaking, a non-payment but just a suspension of payment leaving the door opened to negotiations with the biggest creditors and indirectly confirming that the 91,6 billion $ debt of the country will have to be restructured. He added that he was not considering any devaluation of the Lebanese pound in the very near future. As for the Coronavirus crisis, on Friday 13 March, there are now 73 cases in Lebanon with two deaths and one patient reportedly cured. Four Gulf countries have decided to suspend the flights to Lebanon (Saudi, Qatar, Koweit, Bahrein) while Lebanon itself has suspended on Wednesday 11 all flights to countries particularly touched by the virus (Italy, South Korea, Iran, China, Hong Kong, Macao, Taiwan). Lebanese nationals abroad, diplomats, and soldiers from the United Nations Interim force in (South) Lebanon (UNIFIL) have been requested to fly back to Lebanon within four days after which all flights will be interrupted for at least one week. A loan of 39 million $ has been requested to the World Bank for the purchase of medical equipment. Following government directives, since Thursday 12 March, night clubs, bars, restaurants, cinemas, schools, universities and all Lebanon ski resorts have been closed down.