BEIRUT: Lebanon appeared Saturday to be headed for its first debt default as top officials indicated they opposed making an upcoming bond repayment amid a spiralling financial crisis.
The country, hit by a severe liquidity crunch and months of anti-government protests, was due to decide Saturday whether to repay a $1.2-billion Eurobond maturing on March 9.
The president, prime minister and senior finance officials “agreed to support the government in any decision regarding debt management, with the exception of a payment of debt maturities,” the presidency said in a statement.
That was widely seen as a signal that officials are leaning toward defaulting on the payment due next week.
A cabinet meeting was under way to decide on a course of action and Prime Minister Hassan Diab was due to address the public at 1630 GMT.
He was expected to announce a series of belt-tightening measures to steer Lebanon out of crisis, political sources said.
The presidency on Monday said an economic rescue plan would include “financial, administrative and banking reforms,” without providing additional details.
Lebanon’s debt burden, long among the largest in the world, is now equivalent to nearly 170 percent of its gross domestic product (GDP).
Despite a series of crisis, the country has never before defaulted, but in recent months it has grappled with its worst economic turmoil since the 1975-1990 civil war.
Foreign currency inflows have slowed, Lebanon’s pound has plunged and banks have imposed tough restrictions on dollar withdrawals and transfers.
According to Marwan Barakat, head of research at Bank Audi, Lebanese banks owned $12.7 billion of the country’s outstanding 30 billion Eurobonds as of the end of January.
The central bank held $5.7 billion and the remaining were owned by foreign creditors, he said.
According to local media reports, Lebanese banks have recently sold a chunk of their Eurobonds to foreign lenders.
Local banks, which own a chunk of the Eurobonds maturing on March 9, have argued against a default, saying it would pile added pressure on a cash-strapped banking sector and compromise Lebanon’s ties with foreign creditors.
Lawmakers, most notably those representing the Shiite Amal and Hezbollah movements, have advocated debt restructuring to preserve plummeting foreign currency reserves.
Anti-government demonstrators who have remained on the streets since October have also lobbied against repayment, fearing a depletion of reserves could further limit access to their savings.
“We shouldn’t have to pay the price of government shortcomings,” said Nour, a 16-year-old demonstrator, during a rally outside central bank headquarters in Beirut.
Lebanon’s sovereign debt rating slid into junk territory long ago, but investor confidence has fallen further since the mass protests erupted.
Credit rating agencies have warned of further downgrades in the event of a default, but economists have stressed the need to protect Lebanon’s foreign currency reserves.
Jad Chaaban, an economics professor at the American University of Beirut, blamed the political class for Lebanon’s predicament, accusing them of decades of corruption.
“This ‘catastrophe’ or ‘fireball’ is the creation of a failed and criminal political class that has lied and robbed for more than 30 years,” he said on Facebook.
He called on officials to restructure the debt and introduce an economic rescue plan that would protect modest depositors.
Diab met last month with a delegation from the International Monetary Fund to discuss how to tackle the country’s spiralling economic crisis.
The premier asked the Washington-based crisis lender for advice, but has yet to ask for financial assistance.
Barakat at Bank Audi said IMF assistance was necessary.
“Lebanon needs first and foremost an imminent debt restructuring plan within the context of a comprehensive plan for debt management,” he told AFP.
“The best is to have such a plan under the umbrella of the IMF for international financial assistance to materialize.”
The Lebanese pound, which has been pegged to the dollar since 1997, has plummeted on the parallel market, amid soaring inflation and unemployment.
The World Bank has warned of an impeding recession that may see poverty rates rise drastically.
Crisis-hit Lebanon stumbles toward first debt default
https://arab.news/rc48n
Crisis-hit Lebanon stumbles toward first debt default
- Country has been hit by severe liquidity crunch and months of anti-government protests
Fresh clashes kill six in Iran cost-of-living protests
- The protests began on Sunday in Tehran, where shopkeepers went on strike over high prices and economic stagnation
- Earlier Thursday, state television reported that a member of Iran’s security forces was killed overnight during protests in the western city of Kouhdasht
TEHRAN: Protesters and security forces clashed in several Iranian cities on Thursday, with six reported killed, the first deaths since the cost-of-living demonstrations broke out.
The protests began on Sunday in Tehran, where shopkeepers went on strike over high prices and economic stagnation, and have since spread to other parts of the country.
On Thursday, Iran’s Fars news agency reported two people killed in clashes between security forces and protesters in the city of Lordegan, in the province of Chaharmahal and Bakhtiari, and three in Azna, in neighboring Lorestan province.
“Some protesters began throwing stones at the city’s administrative buildings, including the provincial governor’s office, the mosque, the Martyrs’ Foundation, the town hall and banks,” Fars said of Lordegan, adding that police responded with tear gas.
Fars reported that the buildings were “severely damaged” and that police arrested several people described as “ringleaders.”
In Azna, Fars said “rioters took advantage of a protest gathering... to attack a police commissariat.”
During previous protest movements, state media has labelled demonstrators “rioters.”
Earlier Thursday, state television reported that a member of Iran’s security forces was killed overnight during protests in the western city of Kouhdasht.
“A 21-year-old member of the Basij from the city of Kouhdasht was killed last night by rioters while defending public order,” the channel said, citing Said Pourali, the deputy governor of Lorestan Province.
The Basij are a volunteer paramilitary force linked to Iran’s Revolutionary Guards, the ideological branch of the Islamic republic’s army.
Pourali said that “during the demonstrations in Kouhdasht, 13 police officers and Basij members were injured by stone throwing.”
In the western city of Hamedan, protesters torched a motorbike in what the Tasnim news agency described as an unsuccessful attempt to burn down a mosque.
The same agency reported on Thursday that 30 people in a district of Tehran had been arrested the night before for alleged public order offenses in a “coordinated operation by the security and intelligence services.”
- ‘End up in hell’ -
The demonstrations are smaller than the last major outbreak of unrest in 2022, triggered by the death in custody of Mahsa Amini, who was arrested for allegedly violating Iran’s strict dress code for women.
Her death sparked a nationwide wave of anger that left several hundred people dead, including dozens of members of the security forces.
The latest protests began in the capital and spread after students from at least 10 universities joined in on Tuesday.
Iranian President Masoud Pezeshkian has sought to calm tensions, acknowledging protesters’ “legitimate demands,” and he urged the government Thursday to take action to improve the economic situation.
“From an Islamic perspective... if we do not resolve the issue of people’s livelihoods, we will end up in Hell,” Pezeshkian said at an event broadcast on state television.
Authorities, however, have also promised to take a “firm” stance, and have warned against exploiting the situation to sow chaos.
Local media coverage of the demonstrations has varied, with some outlets focusing on economic difficulties, and others on incidents caused by “troublemakers.”
Iran is in the middle of an extended weekend, with the authorities declaring Wednesday a bank holiday at the last minute, citing the need to save energy during the cold weather.
They made no official link to the protests.
The weekend in Iran begins on Thursday, and Saturday is a long-standing national holiday.
Iran’s prosecutor general said on Wednesday that peaceful economic protests were legitimate, but any attempt to create insecurity would be met with a “decisive response.”
“Any attempt to turn economic protests into a tool of insecurity, destruction of public property, or implementation of externally designed scenarios will inevitably be met with a legal, proportionate and decisive response.”
- Viral video -
Earlier this week, a video showing a person sitting in the middle of a Tehran street facing down motorcycle police went viral on social media, with some seeing it as a “Tiananmen moment” — a reference to the famous image of a Chinese protester defying a column of tanks during 1989 anti-government protests in Beijing.
On Thursday, state television alleged the footage had been staged to “create a symbol” and aired another video purportedly shot from another angle by a police officer’s camera.
Sitting cross-legged, the protester remains impassive, head bowed, before covering his head with his jacket as behind him a crowd flees clouds of tear gas.
On Wednesday evening, Tasnim reported the arrest of seven people it described as being affiliated with “groups hostile to the Islamic Republic based in the United States and Europe.”
It said they had been “tasked with turning the demonstrations into violence.” Tasnim did not say when they were arrested.
The national currency, the rial, has lost more than a third of its value against the US dollar over the past year, while double-digit hyperinflation has been undermining Iranians’ purchasing power for years.
The inflation rate in December was 52 percent year-on-year, according to the Statistical Center of Iran, an official body.
