Lebanon can’t ‘bear brunt’ of debt, says PM, setting stage for first-ever default

Lebanon cannot meet its upcoming debt maturities, the Prime Minister announced on Saturday, putting the heavily indebted state on the road to a sovereign default as it grapples with a major financial crisis.

In a televised address to the nation, Prime Minister HassanDiab declared the suspension of a bond payment of $ 1.2 billion on March 9, saying that the reserves of foreign currency had reached dangerously low levels and were necessary to respond basic needs.

Diab said Lebanon’s public debt had reached around 170% of gross domestic product, which means the country was close to being the most indebted state in the world.

“The debt has become larger than Lebanon can bear, and greater than the ability of the Lebanese to meet interest

payments, “he said.” Given the current situation, the State cannot pay the future installments …

“The Lebanese state will endeavor to restructure its debt in accordance with the national interest by organizing fair and well-intentioned negotiations with all the lenders,” he added.

The default will mark a new phase of a crisis that has shaken the economy since October, cutting around 40% of the value of local currency, depriving savers of full access to their deposits and fueling unrest.

The crisis is widely regarded as the greatest risk to the stability of Lebanon since the end of the 1975-90 civil war.

Lebanon has a total of about $ 31 billion in dollar bonds, according to sources at Reuters on Friday, the government would seek to restructure negotiations with creditors.