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Beirut seeks funds from more allies after Qatar’s $500M

Nadim Munla speaks during an interview in Beirut, Thursday, March 22, 2018. (The Daily Star/Mohammad Azakir)

Lebanon is in talks with allies to secure financial backing that would help it manage one of the world’s highest debt burdens after Qatar pledged to buy government bonds worth $500 million. The support could come in the form of deposits or a purchase of Lebanese Eurobonds at reduced interest rates, Nadim Munla, senior adviser to Prime Minister Saad Hariri, said in an interview on Tuesday in Beirut. He declined to name the countries involved in the talks.

The funds would help ease investor concerns that Lebanon is on the brink of a financial meltdown sparked by political turmoil and doubts over its ability to repay debts. They would also buy the Cabinet, which was formed last week after nine months of deadlock, much-needed time to implement steps agreed with international donors in return for $11 billion in aid.

“We are actively pursuing friendly countries to help us mitigate the short-term crisis we have faced because of the delay in the formation of the government,” Munla said. With the money, Lebanon would be able to reduce the cost of debt servicing, he said.

After Qatar’s pledge, Saudi Arabia’s finance minister said the kingdom would support the economy “all the way.”

The newly formed Cabinet will soon announce a plan to eventually slash costly subsidies to the state-owned electricity company, Munla said, a move that would save hundreds of millions of dollars a year. Other proposals under discussion include the implementation of a program to overhaul the public sector.

The plans were agreed last year with donors and lenders, including the World Bank, to help revive economic growth and reduce the budget deficit by one percentage point a year over five years.

Spending, however, increased in 2018 as oil prices and interest rates climbed. Lebanon’s public debt, estimated at over 160 percent of gross domestic product this year, is projected to rise to near 180 percent by 2023, second only to Japan’s, according to the International Monetary Fund.

 
A version of this article appeared in the print edition of The Daily Star on February 06, 2019, on page 4.

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