Lebanon's debt crisis: A race against time for Eurobond resolution

Report by Bassam Abou Zeid, English adaptation by Yasmine Jaroudi

Lebanon has long relied on issuing dollar-denominated bonds, known as Eurobonds, whenever the state needed financing.

These bonds reached a peak in March 2020 when the government of Hassan Diab announced a default on payment, totaling $31 billion, including $11 billion owed to foreign bondholders.

This figure increased as domestic holders, particularly banks, bought bonds, bringing the total owed to foreign creditors to $16 billion, hoping to profit from the Eurobond price increase if reforms are implemented and an agreement is reached with the International Monetary Fund (IMF).

Four years have passed without negotiations with foreign creditors on how to repay their dues.

With only one year left before they can file complaints against the state for defaulting, there is a five-year window for creditors to file these complaints, or they risk losing the interest on the bonds, which amounts to 8%.

Deputy Prime Minister Saadeh Al Shami and Finance Minister Youssef Khalil acknowledge this reality and also recognize the difficulty of reaching a consensus on reform laws and an agreement with the IMF within a year.

Consequently, stakeholders find the situation at an impasse and await the following steps from the creditors.