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05 January 2020

Lebanese crisis needs around $25 billion bailout, says former minister

Economists expect 2020 to register Lebanon's first economic contraction in 20 years, with some saying GDP will contract by two per cent.

Bloomberg/Sima Diab

by Kudakwashe Muzoriwa

Lebanon’s former economy minister said that the country needs around $20 billion-$25 billion bailout including International Monetary Fund support to emerge from its financial crisis, reported Reuters.

The ongoing financial crisis has shattered confidence in the country’s banking system and raised investors’ concerns that a default could loom for one of the world's most indebted countries, with a $1.2 billion euro bond due in March 2020.

Nasser Saidi, the former Economy Minister, said that time was running short and the $11 billion in previously pledged support from foreign donors was now roughly half of what was needed to mount a recovery.

Additionally, depositors and investors say they have been kept in the dark about the country's dire financial situation.

Politicians have failed to come up with a rescue plan since Prime Minister Saad al Hariri quit in October 2019 after protests over state corruption.

Credit rating agencies have downgraded Lebanon's sovereign rating and the ratings of its commercial banks on fears of default.

Furthermore, Lebanese companies have laid-off workers and business has ground to a halt. A hard currency crunch has prompted lenders to restrict access to dollars and the Lebanese pound trades a third weaker on the parallel market, driving up prices.

Last month, former Prime Minister Saad Hariri discussed the possibility of technical assistance from the International Monetary Fund and World Bank, but there has been no public mention of a financial package.

RELATED STORIES: Lebanese crisis bailout IMF





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