ASSESSMENTS

Lebanon's Impending Debt Default

Mar 6, 2020 | 17:32 GMT

An image showing Lebanese pounds.

Lebanese pounds.

(Janusz Pienkowski/SHUTTERSTOCK)

Highlights

  • Regardless of what the Lebanese government chooses to do with its March eurobond repayment deadline, it will likely move forward with banking sector restructuring that will negatively impact Lebanese banks and consumers.
  • The government will likely choose to enact austerity measures to secure external financial assistance, something that could threaten its ability to remain in power.

Lebanon is highly likely to default on a $1.2 billion, 10-year eurobond that matures March 9. Even if it makes that payment, the country's finances are near collapse. When that happens it will accelerate a crisis in the country's insolvent banking sector, probably deepening its ongoing currency crisis and setting off a downward economic spiral threatening social and political stability....

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