Lebanon’s currency is artificially strong, but the peg is seen as a hallmark of economic stability and a key reason for Lebanon’s rich diaspora to keep sending money back home. These problems continue to stem from the years-long scheme that the local banking sector and authorities engaged in to maintain the financial system that led to the country’s economic crisis. Diab said that Lebanon will not repay the $1.2 billion Eurobond that was due today, and will seek to restructure its debt as the country's dollar reser We are talking theory that in case Lebanon defaulted then the U.S. would seize. (Reuters), Last Update: Wednesday, 20 May 2020 KSA 10:02 - GMT 07:02, Kuwait’s emir appoints Sabah al-Khalid as new PM, American charged with using $2 million of coronavirus aid for luxury cars, homes, Coronavirus: Indonesia deports Russian social media star after party, Coronavirus: Multiple daily COVID-19 deaths at Lebanon hospitals becomes new normal, Explainer: Everything you need to know about Russia’s Sputnik V COVID-19 vaccine, Swiss crematorium swamped by coronavirus deaths, tries to enable peaceful goodbyes. The term haircut has been used in reference to the Lebanese financial crisis to refer to a forced decrease in deposits. However, given the country’s economic and political crisis, authorities would need to offer a high interest rate to offset risk for investors, causing greater problems in the future and calling into question whether the loan could ever be repaid. Figures released by the Ministry of Finance show that Lebanon’s gross public debt reached $85.32B during the first month of 2019, up from $80.39B in January 2019. Lebanon — which ranked 137th on the list of least corrupt countries out of 180 countries, according to the 2019 Corruption Perceptions Index reported by Transparency International — is also slated to repay $1.2 billion in Eurobonds maturing March 9. Lebanon is in the midst of a dangerous multifaceted crisis: an economic, financial, and socio-political one. ... “Foreign reserves excluding gold is around $38 billion including Eurobonds,” he revealed. During the announcement that Lebanon would not pay the Eurobond, Prime Minister Hassan Diab noted the country’s banking sector is bloated to four times the size it should be and in need of a total overhaul. “We do not need a banking sector that is four times the size of our economy,” he said. For consumers, this may mean an inability to withdraw their money from the financial system or further borrow from institutions with nothing left to lend. For one, a progressive haircut is required. Why doesn’t the world sympathize with Tehran and Damascus? Excessive fiscal and external imbalances, financed through debt for decades under a fixed exchange rate regime, weakened the balance sheets of the sovereign, banks and the central bank, and led to a sudden stop of capital that precipitated a debt, banking and currency crisis. Lebanon — which ranked 137th on the list of least corrupt countries out of 180 countries, according to the 2019 Corruption Perceptions Index reported by Transparency International — is also slated to repay $1.2 billion in Eurobonds maturing March 9. An example of refinancing was used above as a form of restructuring– when a loan with a high interest rate is paid off with a lower interest rate loan, leaving the debtor with lower payments. “Moody’s recent report admitted that Lebanon has never defaulted on the payment of its debts. Local banks are expected to take a haircut on their holdings of domestic government bonds, with Lebanese media reporting that a draft 2020 budget outlines around a $3 billion trim. Another downgrade would further impact Lebanon’s ability to borrow money in the future as lenders would demand higher interest rates for loans to an organization that recently defaulted. Lebanon said Saturday it would default on its Eurobond debt for the first time and seek out restructuring agreements due to a spiralling financial crisis that has hit foreign currency reserves. 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