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Lebanon’s Debt Fix Now Hinges on Central Bank After Lenders Balk

  • Banks are unwilling to buy Treasury bonds offered at 1% rate
  • Lebanon budget delays, regional turmoil are spooking investors
Lebanon's Economy During Political Uncertainty
Photographer: Sima Diab/Bloomberg
Updated on

Lebanese lenders are turning against a government plan to coax them into buying Treasury bonds at lower interest rates, leaving the central bank to go it alone as regional turmoil and budget delays keep the market on edge.

Finance Minister Ali Hassan Khalil said in May that the government wanted to issue 11 trillion pounds ($7.3 billion) of the securities at a rate of 1%, allowing it to cut 1 trillion pounds from the cost of servicing debt under this year’s draft budget. Lenders won’t agree to purchase the bonds at a 10th of the market rate, according to Makram Sader, secretary general of the Association of Banks in Lebanon.