Lebanon has started a forensic audit of the central bank, the Finance Ministry said on Wednesday, one of the steps donors want to see to help the nation claw its way out of a crippling financial crisis, Reuters reported. The government agreed in July to hire turnaround specialist Alvarez & Marsal to conduct the forensic audit, which typically involves close examination of an institution’s financial records and can potentially identify any misuse of funds.

Lebanon may write off two-thirds of its Eurobonds, and a fifth of the local debt, once it overcomes political differences hindering an economic overhaul, Citigroup Inc. says, Bloomberg News reported. The prediction comes as wrangling between government factions, banks and businesses, as well as the fallout from a deadly blast in Beirut, sidetrack the nation’s efforts to fix an economy already in disarray. So dire is the situation that Citigroup analyst Michel Nies says his projections are based on a favorable outcome and can hardly be called a base-case scenario.

Lebanon’s lead negotiator for Eurobond restructuring and a key member of the government’s negotiating team with the International Monetary Fund has resigned, Bloomberg News reported. Talal F. Salman, a Harvard graduate who has been serving as an economic adviser to the Finance Ministry for the past six years, submitted his resignation -- effective Monday -- from his position at the United Nations Development Program and the ministry, according to a person familiar with the matter. He’s the third ministry official to quit over Lebanon’s response to its financial crises.

Lebanon’s central bank has told domestic banks to recapitalize through new means, urge big depositors to move funds back to the country and provision for a 45% loss on their Eurobond holdings, according to several circulars published on Thursday, Reuters reported. Central Bank Governor Riad Salameh later told Reuters the measures aimed to strengthen the banking system, paralysed by the worst financial crisis in Lebanon’s history which has been compounded by this month’s Beirut port blast and COVID-19.

Lebanon’s central bank will only subsidise fuel, wheat and medicine for three more months, an official source said on Thursday, as critically low foreign currency reserves dwindle, Reuters reported. A central bank official was not immediately available for comment, and the caretaker economy minister referred questions on the matter to the central bank. The source told Reuters the bank had informed the government it would end the subsidies then in order to prevent reserves from falling below $17.5 billion.

Lebanon may be in line for $298 million in emergency aid after the Beirut port blast, but the more than $30 billion that some estimate it may need to rebuild its shattered economy will not be forthcoming without reform, the International New York Times reported on a Reuters story. Such change could be stalled by the resignation of Lebanon's government, while a financial rescue plan drawn up in April is likely to have to be reviewed and possibly even ditched by a new administration, two financial sources close to the plan said.

The resignation of Lebanon’s government after last week’s devastating explosion in Beirut threatens to upend any prospect of a debt restructuring deal in the next few months, Yahoo! Finance reported. Senior officials will continue in a caretaker capacity until a new administration is formed. It’s unclear how long that process will take. The Middle Eastern nation defaulted on about $30 billion of Eurobonds in March. Since then, its talks with the International Monetary Fund for a bailout have stalled.

Lebanon's creditors are wary of the risk of even steeper losses as a devastating blast in Beirut complicates an already stalled debt restructuring process, the International New York Times reported on a Reuters story. Even before Tuesday's explosion in Beirut's port that killed 154 people, progress had been slow on a turnaround from deep financial turmoil that culminated in a default on Lebanon's foreign currency debt in March.

As emergency services assess the toll from Tuesday’s deadly explosion in Beirut, one immediate consequence is becoming clear to analysts: it will ratchet up pressure on Prime Minister Hassan Diab to make meaningful progress in talks with international lenders and investors, Bloomberg News reported. For some observers, that means quickly addressing the internal divisions and foot-dragging that have stalled negotiations with the International Monetary Fund about a $10 billion loan program following the country’s March Eurobond default.

Lebanon is hurtling toward a tipping point at an alarming speed, driven by financial ruin, collapsing institutions, hyperinflation and rapidly rising poverty — with a pandemic on top of that, the International New York Times reported on an Associated Press story. On Monday, the country's foreign minister resigned, warning that a lack of vision and a will to implement structural reforms risked turning the country into a “failed state.” The collapse threatens to break a nation seen as a model of diversity and resilience in the Arab world and potentially open the door to chaos.