WASHINGTON: Lebanon’s cabinet is soon expected to approve and send to parliament a long-awaited law needed to restructure its debt burden, the country’s economy minister said, adding that policymakers are in touch daily with the International Monetary Fund.
Lebanon is struggling to emerge from a severe economic crisis following decades of profligate spending by ruling elites that sent the economy into a tailspin in late 2019, with depositors locked out of accounts as debt-laden banks shut down.
Key to the fiscal and economic overhaul is a law on the distribution of financial losses between the state, the central bank, commercial banks and depositors — dubbed the “fiscal gap” law.
Asked about progress on the law, Amer Bizat said the government’s emphasis was on good legislation rather than speedy progress.
“The idea is to present it, discuss in the cabinet, approve in the cabinet, and then send it over to the parliament,” Bizat told Reuters on Tuesday on the sidelines of the annual meetings of the IMF and World Bank. He added that he expected these things to happen “soon.”
“It’s more important that we get something right than we get something fast,” he said.
RELATIONS WITH BONDHOLDERS POSITIVE, MINISTER SAYS
Declining to give details on the numbers being discussed, Bizat said the draft would follow three principles — depositors would get back their money over time with no haircut and that any solution would ensure the banking sector back to health. Furthermore, smaller deposits would get their money back faster than larger depositors, he added.
Bizat also said he was meeting with the IMF every day. Asked whether he would also meet bondholders on the sidelines of the meetings in Washington, Bizat declined to comment but said relations between authorities and those investors were “good, cordial and positive.”
Recent events in the region could bring big positive change for Lebanon, said Bizat, who previously was BlackRock’s global head of emerging markets.
“That change could potentially be very good, very positive for Lebanon,” he said. “Let’s not forget, we’re in the middle of a war still ... but there’s a possibility that the kind of changes that are happening, if stability, if security, comes back to the region, Lebanon could benefit enormously.”
The government is also expecting hundreds of investors to head to Beirut in November for a conference dubbed Beirut One, that Bizat hopes would help rekindle private investor engagement in the country.
“There is a strong interest in imagining the day after,” he said. “We know people are very realistic ... everybody knows that challenges are enormous, and the journey is still very, very long, but I really think people are saying it’s okay to start imagining how things will be after.”
