Lebanon Tallies Up Its Debt Problem, Give or Take a Few Billion

Less than two months into Lebanon’s bail-out discussions with the International Monetary Fund, talk is turning to the need for a Plan B.

Lebanon’s economy has been in freefall since October, when anti-government protests accelerated a financial crisis years in the making. As confidence fell, dollar inflows dried up and the currency plummeted, the government was forced to default on its foreign debt and turn to the IMF for a $10 billion loan to help it overhaul its devastated economy.

Its negotiating team has held 15 sessions with the Washington-based lender, but has yet to progress beyond the first phase as banks, the central bank and the government can’t agree on the scale of the losses and who should foot the bill, let alone the painful reforms that will eventually be required to clinch a deal.

The divisions prompted Henri Chaoul, an adviser to the Finance Ministry, to quit last week after a few months in the job and accuse the political class of colluding with lenders to “torpedo” a deal that would require them to pay the price for bankrupting the state.