Lebanon: Another Country Facing National Bankruptcy?
The Lebanese government has refused to repay the country's sovereign debt, the president said last Saturday, indicating that the heavily indebted state is on the verge of default because of a major financial crisis.
A default on the Lebanese foreign debt is the worst-case scenario of an economic crisis that has been affecting the Lebanese economy since October. The Lebanese currency fell around 40% and the banks are currently denying withdrawal to their customers and savers.
Lebanon has a $1.2 billion euro bond due on March 9, which is part of a broader portfolio of around $31 billion bonds that Reuters says the government plans to restructure in negotiations with its creditors on Friday.
What does that mean?
The announced default this Monday will add another $30 billion in outstanding cross-default bonds. All bonds together had a market value of approx. $12 billion that will evaporate this week, so to speak.
What's next in Lebanon? And which country will be the next? For many Lebanese, even Bitcoin is not a real alternative because their funds are “locked-in” in the bankrupt banking system and banks restrict access. Some of the customers try to buy houses with their deposits, which the respective banks auction, in order to save at least part of the money. Others try to withdraw money in tranches and transfer them to security via Hawala money transfer.
Featured image via AMEinfo