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Lebanon defaults on debt payments for first time

Alias

Moderator
Moderator

So Lebanon will not be making a bond payment of $1.2bn due on Monday. Rather amazing they went so long without defaulting especially considering they had a civil war rage from the mid 70's to 1990.
 
I guess the Coronavirus was the death blow what with the effect on tourism.

Well...

Having a country within a country that is Hezbollah did not help either,
 
I guess the Coronavirus was the death blow what with the effect on tourism.

Well...

Having a country within a country that is Hezbollah did not help either,
I'm sure the virus had an impact but I think what really did them in was the the central bank luring dollar deposits from local banks at high interest rates, often upwards of 15%, to finance the government's spending which is running twin deficits in both the government's budget balance and the current account balance, something that required a certain amount of investor confidence to sustain. But in recent years, that confidence has dried up, and so have capital inflows. Also you got corruption, expats restricting how much their sending back and since 2018 people including locals and foreigners having pulled out a sizable amount of money from the banks. Also the withdrawal limits has been hurting businesses as Lebanon sinks deeper into recession as poverty rises and the country is dealing with a debt crisis, banking crisis, and a currency crisis.
 
Iran already has Hezbollah there, and militia's it can draw upon from across the border in Syria. SA would look for some sunni proxies to fund. Though Iran would be able to throw far less resources at it and likely not for long. Not sure about France and Russia/China may or may not veto a UN intervention. Also might have trouble finding countries willing to provide troops and finances.
 
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