A recovery plan Lebanon is negotiating with the IMF expertly diagnoses the bankrupt state’s colossal losses but fails to commit to radical reform, the vital ingredient needed for a financial bailout of the country’s sinking economy, Reuters reported. The 53-page rescue plan, agreed by the government in April after months of haggling, is recognised by officials, economists and diplomats as the most searching examination of how Lebanon came to pile up debts several times the size of its economy.
North Africa/Middle East
Saudi Arabia’s Binladin Group has cut thousands of jobs and reduced staff salaries between 30% to 70% as the coronavirus outbreak hurts business of the kingdom’s biggest construction company, three sources familiar with the matter said, Reuters reported. The sources declined to be identified and the company did not respond to an email request for comment.
The governments of Abu Dhabi and Dubai are discussing ways to prop up Dubai’s economy by linking up assets in the two emirates, with Abu Dhabi’s state fund Mubadala likely to play a key role in any deal, three sources familiar with the matter said, Reuters reported. Some economic sectors have come to a near standstill in Dubai during the coronavirus outbreak, and it faces its most severe downturn since a 2009 debt crisis. It lacks the oil wealth of Abu Dhabi to cushion the blow.
Lebanon’s financial prosecutor ordered the detention of a director at Banque Du Liban for alleged currency manipulation, the first such move against a central bank that’s been under heavy scrutiny since the start of the country’s financial crisis, Bloomberg News reported. Prosecutor Ali Ibrahim said Mazen Hamdan, director of the cash operations department at the central bank, bought dollars from exchange bureaus and weakened the pound on the black market, the state-run National News Agency reported.
A financial scandal has swept through London and the United Arab Emirates, centered on allegations of fraud at the two core companies of the Abu Dhabi-based tycoon Bavaguthu Raghuram Shetty, Bloomberg News reported. Both NMC Health Plc and Finablr Plc have had their shares suspended in London, with NMC losing its place in the FTSE 100 index of leading U.K.-listed companies.
Emirates NBD has $23.66 million to the Dubai subsidiary of Phoenix Commodities which had recently filed for liquidation, Dubai’s biggest lender said on Tuesday, Reuters reported. Emirates NBD bank said in a statement that the exposure was to Phoenix Global DMCC, a unit of Phoenix Commodities Pvt Ltd. Phoenix, with offices in Dubai and Singapore, is being liquidated after amassing more than $400 million in potential trading losses, according a document prepared by the liquidators seen by Reuters. The document did not name the creditors but sources familiar with the company had told Reuters t
The Israeli government will demand that El Al Israel Airlines carries out an overhaul, including layoffs, before agreeing to throw a lifeline to the cash-strapped airline, officials said on Sunday, Reuters reported. El Al, Israel’s flag carrier, is seeking state-backed loans of $400 million to help it through the coronavirus crisis, as foreigners are barred from entering the country and incoming Israelis must enter quarantine. The airline suspended passenger flights until at least the end of May while about 6,000 of its workers are on unpaid leave until June 30.
As Iraq inches toward the formation of a new government, the risks are stacking up for OPEC’s second-biggest crude producer, Bloomberg News reported. Beyond the country’s long-standing sectarian tensions, frayed relations with the Kurdish north, a bloated public wage bill and endemic corruption, new Prime Minister Mustafa Al-Kadhimi now has to grapple with a collapse in oil revenue and the fallout from the Covid-19 pandemic. Little wonder that the country is seeking financial aid from the U.S.
Only a handful of Lebanese lenders are expected to emerge from an economic rescue plan that many banks, who are among the government’s biggest creditors, oppose because it would wipe out $20.6 billion in shareholder capital, Reuters reported. Lebanon is trying to enlist the International Monetary Fund’s help and restructure around $90 billion in debt to end an economic crisis which has included a sovereign default, a currency crash and widespread public protests.