After months of circulating debates and reassurances to the Lebanese public that Lebanon will pay its maturing Eurobond due in March 2020, the rhetoric surrounding the matter eventually shifted to basically “how are we going to avoid this?”
As the debates and talks escalated from a decision as to whether or not to default on payment for the first time in Lebanon’s history to eventually seeking the assistance of the International Monetary Fund, Lebanon has once again changed the action plan.
As reported by multiple outlets, Lebanon intends to ask for a seven-day grace period for a $1.2 billion it owes by March 9th, 2020.
The good news in all of this is that Lebanon is entitled to, in order to give financial advisers sufficient time to draft a rescue plan, according to a government source that spoke to the media on Thursday.
Financial sources have further said that the request for a seven-day grace period would make it more likely the government would seek to restructure the March 2020 Eurobond.
Lebanon faces two further Eurobond maturities this year, one in April 2020 and one in June 2020. This hurdle is sadly not over.
Lebanon’s anticipated economic crisis culminated late last year as capital inflows slowed and the revolution erupted against the ruling elite over both corruption and bad governance.
As Lebanon currently works with its U.S. advisers (funny considering the evident U.S. stance on the Lebanese Government in place, but that’s a different piece.), as well as with the IMF and the newly appointed “expert” Cabinet, the country seems to be headed in the right direction. But then again, it always seems that way… until it isn’t.