Lebanon’s Banks Urge Government to Avoid Domestic Debt Default

Lebanese banks are urging the government to sell state assets and defer maturities to avoid defaulting on its domestic debt and driving the country’s finances into an even deeper crisis, Bloomberg News reported. The Association of Banks in Lebanon made the recommendations in a response to the economic recovery plan the government is discussing with the International Monetary Fund after seeking $10 billion in assistance. Defaulting on domestic debt would “plunge Lebanon’s output to a level somewhere beyond Yemen’s and Cambodia’s and our people would be impoverished for the next decade,” Salim Sfeir, head of the banking lobby, said during a parliamentary committee hearing on Wednesday. The government defaulted on $30 billion of Eurobonds in March and is now seeking to hold talks with bondholders, mainly local banks, to revamp its debt. That’s fueling concern among lenders that they may be driven to the wall. Read more