Qatar will buy $500 million worth of Lebanese government bonds in a bid to support the country's economy, the Qatari Ministry of Foreign Affairs announced today.
In a statement, Foreign Minister Mohammed Bin Abdulrahman Al Thani said Qatar has always been committed to supporting Lebanese people, citing the "profound fraternal ties between the two brotherly countries".
"We wish stability and prosperity for the Lebanese Republic and the Lebanese people, and that the Lebanese economy will recover," the foreign minister said in a statement to Qatar News Agency. "The region needs a strong and prosperous Lebanon."
The decision to invest in Lebanon's struggling economy came after Qatar's Emir Sheikh Tamim Bin Hamad Al Thani first-ever visit to Beirut for the Arab economic summit this weekend; he was one of only two Arab leaders to attend the meeting. Al Thani later met Lebanese President Michel Aoun, when it is suspected that the Lebanese premier appealed to the gas-rich Gulf state for its support.
Eurobonds rallied on the announcement reaching a four month high, but commentators warned that the cash injection would prove insufficient to deal with the country's challenges. Lebanon is the world's third most indebted country and has been facing an acute cash shortage, amid a high public finances bill and years of slow economic growth. Import dependent, the economy faces similar challenges to its neighbours, including rising unemployment, inflation and fears of a currency crash.
Last year, credit rating agencies lowered Lebanon's outlook to negative, making government bonds less attractive and increasing speculation about the vulnerability of the Lebanese Lira. The country's banking sector has been particularly affected by the lack of investment, with the International Monetary Fund (IMF) urging for the government to take critical measures to avoid refinancing risks.
However the government formation process which stalled last May has prevented reforms from taking place, leaving the country severely cash strapped.
News of the investment also followed comments made by Lebanese Foreign Minister Gebran Bassil, who yesterday suggested the country backed Doha in the ongoing Gulf blockade against Qatar. Saudi Arabia, the UAE, Bahrain and Egypt appeared to boycott the Arab League's economic summit this weekend, following news that Qatar's Emir would be attending; Bassil praised Qatar's attendance, stating it had "saved the summit from failure".
"The Emir of Qatar broke the blockade imposed on his country when he arrived in Beirut after a five-hour trip, in a political initiative to break the blockade on the summit," he told a press conference at the end of the summit.
Lebanese-Gulf relations have been strained since Saudi Arabia's detention of Prime Minister Saad Hariri in late 2017, when he was virtually forced to resign, an announcement that he has since rescinded. Tension between Hariri and the Kingdom has also increased as a result of his alliance with Michel Aoun, a close ally of the Iranian-backed Hezbollah in Lebanon.