Lebanon’s Debt-Resolution Challenges Continue, One Year On From Default

Lebanon’s Debt-Resolution Challenges Continue, One Year On From Default

A year after Lebanon's first sovereign default, the situation in the country has deteriorated sharply. Political paralysis, a dramatic decrease in standards of living and the fallout from the coronavirus pandemic have pushed protestors to the streets once again. Prime Minister-designate Saad Hariri has been unable to form a new government, seven months after the previous cabinet resigned following the Beirut port explosion last August. Without a new government, Lebanon cannot secure an IMF program or international donor support, and it cannot restructure its $90 billion sovereign debt pile. Recent calls by Maronite Patriarch Bechara Boutros al-Rai for a new administration that is neutral in regional conflicts were met with support on the streets, but whether these calls will yield anything is unclear. "The moving response to Patriarch Boutros Al-Rai's appeal for neutrality demonstrates amply how the population is willing to respond to get the country on the right trajectory," said Dr Florence Eid-Oakden, CEO and chief economist at Arabia Monitor. "But the key to Lebanon's political apparatus is not in the hands of demonstrators." Lebanese government Eurobond trading is as stagnant as the political landscape, as weary investors wishing to exit the credit can only do so at a