Creating new perspectives since 2009

Lebanon to stop paying all maturing Eurobonds, shuts down parliament amid coronavirus fears

March 23, 2020 at 12:54 pm

Students wear masks to protect themselves from coronavirus as a precaution in Beirut, Lebanon on 22 February 2020 [Hussam Chbaro/Anadolu Agency]

Lebanon’s Ministry of Finance announced today that the government will stop all payments of maturing Eurobonds.

Lebanese Prime Minister Hassan Diab had initially announced that the government would withhold payment of the $1.2 billion debt on 7 March, “in order to safeguard foreign currency reserves.”

The decision to discontinue all payments comes “in furtherance of this objective,” according to a statement from the Ministry of Finance.

The statement confirmed the government’s commitment to the three-pronged economic reform initiative to put Lebanon on a more stable and sustainable economic path but fell short of expanding on the nature of planned reforms.

Lebanon is grappling with its worst financial crisis since the end of the civil war in 1990, which has resulted in rapid inflation and pushed up to 40 per cent of the population under the poverty line, according to estimates by the World Bank.

The nationwide lockdown, as a result of the coronavirus outbreak, has worsened the situation. Few bank branches remain open, while some cash-strapped banks have cut all access to dollars for depositors.

READ: Flower shops in locked-down Lebanon open for Mother’s Day but nobody comes

According to Al Jazeera some customers were told to withdraw cash from ATMs in Lebanese Lira at the pegged rate which is roughly 40 per cent weaker than the parallel market, effectively halving the value of their savings.

The move to discontinue payments amid a deepening financial crisis comes after Lebanon’s parliament postponed Wednesday’s parliamentary meeting to a date “to be determined.”

Parliamentary committee meetings have been delayed indefinitely, and all MPs offices are set to be closed as part of measures to prevent the spread of coronavirus.

Diab declared a state of “general mobilisation” on 15 March, enforcing the closure of air, land and seaports to all but essential flows, and ordered the closure of non-vital public and private institutions.

Despite the shutdown, MP Assem Araji, a member of the Parliamentary Health Committee, said in an interview with LBCI, that the “Lebanese are not abiding by the terms of home quarantine.”

The news outlet added that heavy pedestrian and vehicle traffic was seen in the northern city of Tripoli on Friday, with the majority of people not wearing masks or gloves.

Lebanon’s Internal Security Forces (ISF) gave 227 fines for shutdown violations over the weekend, after Prime Minister Hassan Diab called on the army and ISF to ensure residents were complying with the shutdown.

Residents have been asked to stay home unless it is extremely necessary to go out.

Lebanon man: We’ll starve under quarantine