The International Monetary Fund said Lebanon’s central bank risks undermining its credibility if it agrees to a government proposal to buy Treasury bills at below-market rates, in a bid to cut 1 trillion pounds from debt-servicing costs.
“Buying the proposed low-interest government debt would worsen the BdL’s balance sheet and undermine its credibility. The BdL should gradually phase out its financial operations once fiscal adjustment and the subsequent decline in yields demanded by investors allow it to do so,” the IMF said.
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