ANSD : Lebanon: Debt restructuring not on the table

TUE 26 - 11 - 2024

Date: Jan 14, 2019
Source: The Daily Star

Lebanon: Debt restructuring not on the table

_{Hussein Dakroub| The Daily Star}
BEIRUT: Restructuring Lebanon’s public debt is “not on the table at all,” caretaker Finance Minister Ali Hasan Khalil said Sunday, adding that the Lebanese state was committed to paying all maturing debt and interest payments on time.

Khalil spoke after an extraordinary meeting chaired by President Michel Aoun at Baabda Palace, highlighting officials’ concerns over the country’s ailing economy, burdened by $84 billion in debt.

The meeting, attended by Prime Minister-designate Saad Hariri, was apparently designed to reassure investors after comments by Khalil about the public debt last week caused confusion in the financial market and sparked a sell-off in Lebanese dollar-denominated bonds.

Meanwhile, officials organizing the 2019 Arab Economic and Social Development Summit set to be held in Beirut on Jan. 19-20, said Sunday the meeting would be held on time, rejecting calls, mainly by Speaker Nabih Berri, for the event to be postponed over Libya’s participation and the failure to invite Syria.

Speaking to reporters after the Baabda meeting that was also attended by caretaker Economy Minister Raed Khoury and Central Bank Governor Riad Salameh, Khalil said talks underlined the need for Lebanon to implement structural reforms committed in the CEDRE conference to revitalize the sluggish economy.

“The Lebanese state has been committed historically, at present and in the future, to safeguard the rights of depositors, banks and holders of sovereign debt instruments of all kinds,” Khalil, a key political aide to Berri, said.

He added that Lebanon was bound by its commitments to pay “maturities and interest at the predetermined dates without any other measure.”

“What is being proposed currently is the implementation of reforms included in the 2018 state budget and those the Lebanese state has committed at the CEDRE conference,” Khalil said.

Among those reforms, Khalil said, is to achieve partnership between the public and private sectors, bring public spending under control, reduce the budget deficit, secure financial balance and bolster and diversify the productive sectors in Lebanon.

Held in Paris on April 6 last year, the CEDRE conference raised over $11 billion in grants and soft loans to finance investment and infrastructure projects in Lebanon.

In return, Lebanon pledged to carry out reforms to shore up the weak economy. However, the implementation of the reforms remains contingent on the formation of a new government, now in its eight month of deadlock. Lebanon has one of the biggest debt-to-GDP ratios in the world at around 150 percent.

Late last week, Khalil said that he had no intention to restructure the public debt, stressing that his main goal was to reduce public debt and carry out necessary reforms.

His statement came after a local newspaper article cited him as saying the Finance Ministry intended to restructure the country’s public debt.

The Baabda meeting followed repeated calls from Lebanese officials and economists for rival political leaders to set their differences aside and form a new Cabinet to avert an economic catastrophe.

Meanwhile, Lebanese divisions over the upcoming Arab economic summit continued to reverberate in the country, raising fears of street protests threatened by supporters of Berri’s Amal Movement to prevent the Libyan delegation from attending the event.

In a move confirming that the summit would be held on time, the committee organizing the event Saturday conducted a field drill featuring arrangements for the arrival of Arab delegations from the Beirut airport up to the meeting venue at the Seaside Arena.

“The summit will be held on time. So far, we have not received any request from any Arab country or from the Arab League for postponing the summit. Therefore, the summit will be held on time,” Rafik Shalala, chief spokesman of the summit, told The Daily Star Sunday.

Shalala said so far eight Arab heads of state have confirmed that they would attend, while no Arab country, including Libya, had said it would not.

Al-Jadeed TV reported Sunday night that in the face of growing Shiite opposition to its participation, Libya was studying the possibility of staying away from the summit.

Asked to comment on possible street protests against Libya’s participation, Shalala said: “Lebanon is committed to protecting the participants in the summit as well as the venue of the meeting. A 7,500-man security force, made up of the Lebanese Army and other security units, has been set up to protect the summit.”

Berri and his Amal Movement are opposed to Lebanon having ties with Libya because of the 1978 disappearance of the movement’s founder, Imam Musa Sadr, and two of his companions during an official visit to the country when it was ruled by Moammar Gadhafi.

The Higher Shiite Council has condemned and rejected Libya’s participation in the summit, saying this would be “a challenge to the feelings of the Lebanese and offending to the case of Imam Musa Sadr and his two companions.”

The council warned after an emergency meeting Friday of “potential public reaction that might arise from the insistence to invite the Libyan delegation.”

Local media reported that Amal supporters had threatened to cut off Beirut's Airport Road to prevent the Libyan delegation from reaching the summit venue.

Amal supporters Sunday tore the Libyan flag down from a flag pole near the summit venue and replaced it with the movement’s flag.

“They have hoisted Libya’s flags in Beirut as an act of challenge and provocation. We had thought that they will hoist the pictures of Imam Musa Sadr ... The Libyan delegation will not enter Lebanon,” Amal MP Ali Bazzi from Berri’s parliamentary bloc told MTV Sunday night.

In another interview with Radio Liban, Bazzi called for the summit to be postponed for two months. He said the new regime in Libya had failed to cooperate with Lebanon to determine the fate of Sadr and his two companions.

The fate of the summit has been in doubt since Berri called for it to be postponed for the same reason.

Berri also opposes hosting the summit while Lebanon’s government is in caretaker status and is calling for Syria to be allowed to participate, despite the country’s membership in the Arab League having been frozen since 2011, after the outbreak of the civil war.

In an escalation of his opposition to Libya’s participation in the summit, Berri was reported to have threatened to stage an armed revolt similar to the Feb. 6, 1984 uprising against the regime of President Amine Gemayel, spearheaded by Amal and other allies political groups, which led to the Army’s division and the ousting of its Christian members to the eastern side of the capital.

Berri’s threat drew a rebuke from caretaker Foreign Minister Gebran Bassil, who said the Free Patriotic Movement was committed to its 2006 understanding with Hezbollah, while rejecting attempts to repeat the 1984 uprising.

Bassil was referring to the Memorandum of Understanding between FPM founder President Michel Aoun and Hezbollah leader Sayyed Hasan Nasrallah on Feb. 6, 2006, at the Mar Mikhael church in Beirut’s southern suburb of Chiyah.

“We only know one Feb. 6 and that is in Mar Mikhael. We don’t know the other Feb. 6,” said Bassil, the FPM head. He added that the Feb. 6, 2006, understanding with Hezbollah was aimed at achieving unity and get-together among the Lebanese.

Responding to Bassil, Amal MP Ali Khreis said in a statement: “Bassil of course doesn’t know about Feb. 6, the historical event that moved Lebanon to the era of resistance and liberation.”

Separately, Maronite Patriarch Beshara Rai has invited the leaders of Lebanon’s main Christian parties and MPs affiliated with them to a meeting in Bkirki Wednesday to discuss the deteriorating economic situation and the Cabinet formation deadlock.

The meeting comes ahead of Rai’s planned trip to the United States on Jan. 21.

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