Lebanon Asks IMF for Help in Restructuring Debt / Lebanon's Financial Dilemma

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  • Resign

    Resign

    Well-Known Member
    Orange Room Supporter
    خفضت وكالة ستاندرد اند بورز تصنيف لبنان إلى
    CC/C
    توقعا لإعادة هيكلة الدين مع نظرة مستقبلية سلبية، وعزت نظرتها السلبية للبنان إلى احتمال خفض التصنيف إذا تخلفت الحكومة في سداد مدفوعات الفائدة أو أصل الدين التالية، والى اعتقادها أن إعادة الهيكلة عدم السداد في دين الحكومة شبه مؤكد بصرف النظر عن التوقيت.

     
    Resign

    Resign

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    Kamil bou Sleiman appointed state attorney in the Eurobonds restructuring affair

    I’d like to believe we’re in safe hands.
    @CrusaderV
     
    LEBANESE-CIA

    LEBANESE-CIA

    Legendary Member



    إذا سراق سرق علبة سردين بينجاب ينحبس..
    فلان وعلان لازم نثبت عليهم، فهمنا..
    بس أصحاب المصارف لا بدهم محكمة ولا استحداث قوانين ولا اعداد ملفات..
    الجرم علني ومنقول لايف..
    حطوا الناس مصرياتهم عندهم وهلأ مش عم يردوهم..
    فينا نفهم ليه متروكين بلا منع سفر وبلا حجز ممتلكات وبلا سجن

     
    dyyyy

    dyyyy

    Well-Known Member
    المشكل منو أن بس من ثلاث سنين جدد، المشكل ان بذات النهار يلي كان عم بيتظاهر في التيار قدام المصرف كان مشال عون مجتمع مع رئيس جمعية المصارف و ما وجهلو و لا كلمة، جبران بسيل بعد ما وجهولا كلمة لرياض سلامة، رئيس الحكومة حسان دياب يلي عطيو الثقة التيار أعلن أن بده يجدد لرياض سلامة و ما إجا ولا رد من التيار.

    كل يلي صار هو كرمال بكرا بس العالم تنسا يقولولنا: نحنا بوقتا جربنا نشيلو بس ما خلونا
     
    Resign

    Resign

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    good read


    Revival and Reform – IMF’s Lebanon Rescue Process
    • Published on February 21, 2020
    Rony Yaacoub
    Rony Yaacoub

    Finance Lawyer at the European Bank for Reconstruction and Development
    5 articles Follow

    In a promising first step, the Lebanese government requested the International Monetary Fund (“IMF”) to provide technical assistance on devising a plan to stabilise Lebanon’s nose-diving economy. This assistance is likely to lead to a next step of IMF intervention, but only in case the Lebanese government requests it. This step would be an IMF lending to Lebanon to help tackle its balance of payments needs.
    Before undertaking any such Lending, the IMF carries out a debt sustainability analysis (DSA) exercise in order to determine first whether the debt is sustainable, and second whether a restructuring of a state’s debt is necessary. In Lebanon’s case, this exercise will yield one result – the debt is unsustainable. In its 2019 Article IV Consultation Report issued in October 2019, the IMF concluded that “With public debt already above 150 percent of GDP and gross financing needs of over 30 percent of GDP, Lebanon’s public debt is unsustainable under the baseline scenario.[1] and that “External debt was unsustainable at 190 percent of GDP in 2018, while the current account deficit stood at over 25 percent of GDP.[2] When the country’s debt is deemed unsustainable, the IMF would, in light of the feasibility of policy adjustment and the availability of financing from the different sources, require a restructuring (see graphic below on IMF’s 2016 Lending Framework).
    No alt text provided for this image

    As a member of the IMF, Lebanon would be entitled to access an IMF lending program. As a middle-income economy, this funding would take the form of a Stand-By Arrangement (“SBA”) designed to “address short-term or potential balance of payments problems”[3]. The length of an SBA is typically 12 to 24 months, but can be granted for up to 36 months. The IMF’s loan would bear interest at concessional rates, and each amount disbursed under the SBA would be repaid in eight equal quarterly installments beginning 3¼ years after the date of such disbursement. The size of funding that Lebanon would be able to access depends on whether it would be granted Normal Access or Exceptional Access to the IMF arrangement.
    Under Normal Access, funding would be subject to “(i) an annual limit of 145 percent of quota; and (ii) a cumulative limit of 435 percent of quota, net of scheduled repurchases”[4]. Lebanon’s Quota (SDR) at the IMF stands SDR 633.5 million, which means that, taking the current USD/SDR rate, Lebanon would be entitled only to an amount of USD 1.256 Billion in any given year, and up to USD 3.767 Billion for the entire duration of the program. This amount cannot put Lebanon’s economy or debt on a sustainable footing.
    Lebanon ought to request Exceptional Access to the IMF Stand-By Arrangement, which comes without any explicit monetary limit on the amount that could be extended. However, taking the recent IMF program limits, including in Iceland and Argentina, Lebanon may be able to access 1000% the Quota, which translates as USD 8.66 Billion, over a three-year program. Obtaining Exceptional access, albeit common historically, is by no means automatic, but is instead linked to the following four conditions which must cumulatively be met[5]:
    1. The member must be experiencing exceptionally large balance of payments needs;
    2. There is a high probability that member’s public debt is sustainable in the medium term, or where the member’s debt is assessed to be unsustainable ex ante, the financing being provided from sources other than the Fund would restore debt sustainability with a high probability;
    3. The member having prospects for gaining/regaining access to private capital markets within a timeframe and on a scale that would enable the member to meet its obligations falling due to the Fund; and
    4. The policy program of the member provides a reasonably strong prospect of success, including not only the member’s adjustment plans but also its institutional and political capacity to deliver that adjustment.
    It is important to discuss whether each of these conditions would be met in Lebanon’s case, and in relation to each condition, elucidate to some guiding principles, deduced from empirical evidence and previous debt restructurings, on how Lebanon should conduct its restructuring exercise.
    1- Exceptionally Large Balance of Payment Needs
    The first condition (facing exceptionally large BOP needs) is surely met with Lebanon’s persistent current account deficit. Lebanon has been running large-scale twin deficits for years, and it is clear that, as things stand, Lebanon would not be able to be meet its balance of payment needs.
    2- Restoring Debt Sustainability with “High Probability”
    The second condition should be looked at in light of Lebanon’s debt being deemed unsustainable ex ante. The IMF would require a demonstration that financing provided from sources other than the Fund restores debt sustainability with a high probability. For that purpose, Lebanon must (i) consider a huge haircut on its debt in order to lower it to sustainable levels, (ii) implement sufficient reforms to put the debt on a sustainable path, and (iii) secure funding (in addition to the IMF’s loan) from other international sources in the form of aid or at concessional rates.
    Save for a few historical friends, the expectations of official creditors supporting Lebanon are not significant, unless sufficient reforms are implemented. As to the extent of the restructuring, the government would be ill-advised if it considers that a restructuring of the Eurobonds alone would be enough, irrespective of the extent of the haircut imposed on those bonds. Lebanon’s Eurobonds account for 40% of Lebanon’s government debt, while 60% of that debt is denominated in Lebanese pounds. Even if Eurobonds were restructured with a 60% nominal haircut, this would only decrease Lebanon’s debt-to-GDP by around 33% of GDP (assuming the current official exchange rate)[6]. This would leave the debt-to-GDP at roughly 120%, which would surely continue to be unsustainable. Lebanon cannot but restructure its internal debt as well.
    There is no magic number that the debt-to-GDP ratio must be reduced to for the debt to be considered safe.[7] The debt-to-GDP ratio that a country can sustain without risking a sovereign debt crisis is determined by its primary surplus – its revenue minus expenditure, not counting repayment costs[8]. While the ratio at which debt would become sustainable would need to be determined by Lebanon’s financial advisers, with the help of the IMF, one can safely say that this ratio would, at a maximum, be 80%. This implies a 50% haircut on both the internal and external indebtedness of Lebanon. The state need not, however, impose the same haircut on both prongs of the debt, especially that key social actors, such as the National Social Security Fund, hold considerable amounts of Lebanon’s internal debt.
    Furthermore, Lebanon should avoid falling into the repeated restructurings pitfall. Historically, sovereign debt restructurings have often failed to restore debt sustainability and market access, leading to repeated restructurings and dependence on official financing. Empirical evidence suggests that more comprehensive initial restructurings lessen the likelihood of repeat restructurings, while relatively low haircuts often presage sequential restructurings[9]. An IMF study in 2014 provided systematic evidence on the tendency for restructurings to be too little. From 1980 to 2012, of the 44 countries that restructured their debt, 86 percent had to undergo more than one restructuring. Guided by that fact, Lebanon ought to extract the greatest debt relief in the current restructuring so as to avoid having to undergo this painful exercise again.
    No alt text provided for this image

    3- The Prospects for Regaining Access to Capital Markets
    As to the third condition, the prospects for Lebanon regaining access to the capital markets, it could be met so long as the restructuring is planned well with a deep enough haircut accompanied by serious economic reforms. Two considerations come into play here.
    First, Lebanon must restore the confidence of the international capital markets in its ability to pay. While there is a consensus that defaults do hurt the conditions under which governments can borrow and result in a loss to market access, empirical evidence points out that these effects tend to be short lived and can fade two years after the default[10]. Gelos et al. (2011) similarly document that historically most defaulters regain their access to markets within just one or two years after a crisis. The deeper the haircut on Lebanon’s current debt stock, the more willing future creditors will be to lend, as they would not risk that their debt will need to be restructured any time soon.
    Second, Lebanon has a strong diaspora base, and it could rely on this base to extend the needed financing, when yields are insufficient to attract foreign investors or these investors are unwilling to lend to Lebanon. Lebanon could resort to issuing diaspora bonds in small denominations to its citizens residing abroad. Countries such as Israel and India have had massive success with diaspora bonds. The former, for example, has been able to raise more than $25 billion since the inception of this policy in the mid-20th century.[11] So long as the Lebanese government shows its commitment to reform, its diaspora, with their strong connections to Lebanon, would not falter in lending a helping hand.
    4- Reasonable Prospects of Success of Lebanon’s Policy Program
    Satisfying the fourth condition – Lebanon’s policy program having a reasonably strong prospect of success – mainly depends on the political willingness of the Lebanese government to adhere to the reforms agreed with the Fund. If Lebanon were to implement such measures as are needed to halt corruption and cronyism, enforce effective tax collection and adhere to the economic reform plan, I would have no doubt that the Fund would be willing to grant Lebanon Exceptional Access to a Standby Arrangement.
    Finally, Lebanon being granted Exceptional Access to a Standby Arrangement entails that it be subjected to IMF’s “conditionality” policy[12]. For the IMF to approve the lending to Lebanon, the latter must agree to undertake certain policy adjustments to overcome the problems that resulted in it requesting the IMF funding in the first place. These adjustments are conditions for IMF loans and have a two-fold purpose. First, they ensure that Lebanon would solve its balance-of-payments difficulties without resorting to measures that may be harmful to national or international prosperity. Second, they ensure that Lebanon will be able to repay the IMF. These commitments, including specific conditionality, would be set out in Lebanon’s letter of intent with the IMF, which would likely include a memorandum of economic and financial policies that Lebanon must adhere to.
    As stated above, the SBA would be extended to Lebanon over a period not exceeding three years, during which the funding will be disbursed in installments. To ensure progress in the program implementation and reduce risks to IMF resources, the IMF would conduct periodic reviews of Lebanon’s performance of the conditions, and the results of these reviews would determine whether the remainder of the committed amount would be disbursed.
    As for the conditions that are expected to be attached to Lebanon’s SBA, if and when granted, these cannot be predicted but are determined as a result of extensive studies by the IMF, the Lebanese government and its financial advisers. However, a reading of IMF’s 2019 Article IV Consultation Report provides insight into some of the expect conditions. These include “raising the VAT rate, broadening the tax base and removing exemptions, as well as increasing fuel excises and eliminating electricity subsidies” [13] in addition to “improving governance and reducing corruption”[14]. The final conditions and whether they include these measures, however, remain to be determined on the basis of Lebanon’s arrangement with the IMF.
    In conclusion, while Lebanon’s progress towards the restructuring is in the right direction, Lebanon should demonstrate a clear commitment to reform the economy in order to access IMF funding and secure further funding from other official creditors. The IMF’s involvement in the restructuring adds more credibility to Lebanon’s plan with its creditors, and increases the likelihood of Lebanon securing creditor approval. While IMF’s lending will not come without social costs, enduring the pain for the upcoming few years could yield a resuscitated economy and curb the corruption problem that has long damaged Lebanon’s economy and reputation.

    Disclaimer: this article is not advice and the author accepts no liability for reliance upon any of the facts or matters stated herein. Financial and legal advice on the issues discussed should be sought in the ordinary way. The views expressed herein are solely those of the author in his private capacity and do not in any way represent the views of any entity for which he works or which he represents. No such entity has approved, endorsed, embraced or authorized this article.
    Footnotes:
    [1] IMF, 2019 Article IV Consultation Report, October 2019, p. 33
    [2] Ibid at p 26
    [3] IMF Lending
    [4] IMF Stand-By Arrangement (SBA)
    [5] Access Policy and Limits in the Credit Tranches and Under the Extended Fund Facility and on Overall Access to the Fund’s General Resources, and Exceptional Access Policy—Review and Modification 14064-(08/18)
    [6] Fitch Ratings: Lebanon's Financial Position Points to Debt Restructuring, February 18, 2020
    [7] The 1992 Maastricht Treaty, which led to the establishment of the euro, fixed a maximum debt-to-GDP ratio of 60 per cent for countries that adopt the currency. Estimates of a “safe” ratio for emerging countries (such as Lebanon) have traditionally been set at 40%. This number ought not be taken as sacrosanct, however.
    [8] IBA - ‘Dangerous’ and ‘safe’ debt-to-GDP ratios
    [9] Schroeder, 2014; Mariscal, et al., 2015.
    [10] Panizza et al., 2009
    [11] Diaspora Bonds – Master of Development Practice
    [12] IMF Conditionality
    [13] IMF, 2019 Article IV Consultation Report, October 2019, p 5
    [14] Ibid at p 1



     
    TayyarBeino

    TayyarBeino

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    توجهٌ "بارزٌ" لفرنسا والسعودية لمساعدة لبنان!







    المصدر: رصد موقع ليبانون ديبايت
    |
    الاحد 23 شباط 2020

    نقلت وكالة "رويترز" عن وزير المال الفرنسي برونو لومير قوله: "إذا احتاج لبنان للمساعدة المالية ففرنسا موجودة".

    وختم: "لا يجب خلط قضية تعافي الاقتصاد اللبناني بمسألة إيران".

    وفي الاطار عينه برز موقف لوزير المال السعودي محمد الجدعان الذي قال إنّ "المملكة على اتصال ببلدان أخرى لتنسيق أي دعم للبنان على أساس الإصلاحات الاقتصادية".

    وأضاف للصحافيين في ختام اجتماع لمسؤولي المالية من مجموعة العشرين "المملكة كانت وما زالت تدعم لبنان والشعب اللبناني".
     
    TayyarBeino

    TayyarBeino

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    @jamil_el_sayyed

    ·
    59m

    وزير مالية فرنسا: "مستعدّون لدعم لبنان مالياً، ويجب عدم ربط ذلك بموقف أميركا في مواجهة إيران بالمنطقة"! هي مبادرة إيجابية مشكورة وبعيدة عن الإبتزاز السياسي الذي تمارسه أميركا وبعض العرب، لكن أين أخلاق القوى السياسية عندنا التي نهبت البلد على سنوات وتحرّض على حكومة عُمْرها أيّام؟!
     
    CrusaderV

    CrusaderV

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    Crusader USA 🇺🇸 ready to help Lebanon if government tackle corruption and reforms
    هذا ما تريدهُ أميركا للبنان!












    رصد موقع ليبانون ديبايت | 2020 - شباط - 23


    أشار وزير الخزانة الأميركي ستيفن منوشين إلى أن بلاده تتطلّع لمساعدة صندوق النقد الدولي لبنان في أزمته الاقتصادية، مؤكدًا "أننا نرغب في رؤية الاستقرار الاقتصادي والسياسي في لبنان".

    وقال مونشين، في مقابلة مع الإعلامية هادلي غامبل عبر "CNBC": "صندوق النقد الدولي سيساعد إذا كان السياسيون اللبنانيون مستعدين لإجراء الخيارات الاقتصادية الصعبة، التي أظن أنها ستكون جيدة للشعب اللبناني".

    اعلان


    وأضاف: "لا يزال مبكرًا معرفة ما إذا كان السياسيون مستعدين لفعل ذلك أم لا".

    ووجّه مونشين رسالة إلى الشعب اللبناني قال فيها: "نريد أن يكون لكم مستقبل اقتصادي مشرق".

    وعند سؤاله عن وجود "حزب الله" في لبنان، أكد أن العقوبات الأميركية هدفها إيقاف "الأنشطة الإرهابية" التي تقوم بها إيران، مشددًا على أنها تنجح.
     
    TayyarBeino

    TayyarBeino

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    @JawadAdra

    ·
    19m

    لعله حان الوقت للتفكير باستخدام الذهب لإعادة هيكلة الإقتصاد وحماية الناس وحفظ سيادتنا، شرط أن لا نبدده لتسديد الدين ولا لتمويل الهدر وأن يكون ضمن خطة شاملة. ويفترض أيضا مساءلة للمسؤولين وفهما لأسباب الكارثة. لماذا لا نبدء بالذهب في نيويورك وقد يكون ثلث الكمية؟
     
    TayyarBeino

    TayyarBeino

    Legendary Member
    https://twitter.com/zeebnoob
    @zeebnoob

    4h

    70% of the total Lebanese government debt is in L.L.? Only 30% is foreign currency (mainly USD)-in a sea of bad news, this is a nice bit of information as it means we are less exposed to exchange rate risk and our sovereign risk is lower...


    Image
     
    SoFP1

    SoFP1

    The Chosen One
    Orange Room Supporter
    رويترز: لبنان سيعين شركة كليري جوتليب للمشورة بشأن سندات دولية

    رويترز: لبنان سيعين شركة كليري جوتليب للمشورة بشأن سندات دولية
    محليات

    منذ 5 دقائق



    رويترز: لبنان سيعين شركة كليري جوتليب للمشورة بشأن سندات دولية
    رويترز: لبنان سيعين شركة كليري جوتليب للمشورة بشأن سندات دولية

    قال مصدر قريب من الحكومة اللبنانية اليوم الاثنين إن لبنان سيعين كليري جوتليب ستين اند هاملتون لتقديم المشورة القانونية بخصوص سنداته الدولية، بينما يتوقع المستثمرون ووكالات التصنيف الائتماني أن يعيد البلد المثقل بالدين هيكلة ديونه.
    وقال المصدر إن المسؤولين في المراحل الأخيرة لاختيار الشركة التي سيتقرر تعيينها بشكل منفصل كمستشار مالي.
    يكابد لبنان أزمة مالية خانقة. وأجبر شح العملة الصعبة البنوك على فرض قيود صارمة على السحب من ودائع العملات الأجنبية والتحويلات إلى الخارج في حين هوت الليرة اللبنانية بشدة.
    وكان رئيس مجلس النواب نبيه بري، قال الأسبوع الماضي إن إعادة هيكلة الدين هي الحل الأمثل لاستحقاقات السندات الدولية الوشيكة، التي تشمل 1.2 مليار دولار يحل أجلها في التاسع من مارس آذار.
    ويوم الجمعة، قالت وزارة المالية إنها طلبت مقترحات من 12 شركة لتقديم المشورة المالية بخصوص إعادة هيكلة محتملة للدين.
    وأوضحت أن الشركات هي لازارد وروتشيلد وجوجنهايم بارتنرز وهوليهان لوكي وسيتي بنك وجيه.بي مورجان وبي.جيه.تي بارتنرز ونيوستيت بارتنرز وستاندرد تشارترد وجي.إس.ايه كابيتال بارتنرز ودويتشه بنك ووايت أوك.
    وخفضت ستاندرد اند بورز الأسبوع الماضي تصنيف لبنان السيادي توقعا لإعادة هيكلة الدين. وأخذت موديز خطوة مماثلة، قائلة إن التصنيف ينسجم مع توقعات بأن يتكبد الدائنون من القطاع الخاص خسائر كبيرة في أي إعادة هيكلة للدين.
    وقالت فيتش هي الأخرى إن وضع لبنان المالي يشير إلى إعادة هيكلة الدين.
     
    Robin Hood

    Robin Hood

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    توجهٌ "بارزٌ" لفرنسا والسعودية لمساعدة لبنان!
















    المصدر: رصد موقع ليبانون ديبايت



    |



    الاحد 23 شباط 2020






    نقلت وكالة "رويترز" عن وزير المال الفرنسي برونو لومير قوله: "إذا احتاج لبنان للمساعدة المالية ففرنسا موجودة".

    وختم: "لا يجب خلط قضية تعافي الاقتصاد اللبناني بمسألة إيران".

    وفي الاطار عينه برز موقف لوزير المال السعودي محمد الجدعان الذي قال إنّ "المملكة على اتصال ببلدان أخرى لتنسيق أي دعم للبنان على أساس الإصلاحات الاقتصادية".

    وأضاف للصحافيين في ختام اجتماع لمسؤولي المالية من مجموعة العشرين "المملكة كانت وما زالت تدعم لبنان والشعب اللبناني".
    France > the US.
     
    Danny Z

    Danny Z

    Legendary Member
    1582571697440.png

    1-He's telling the government stop the te3teem el 2e3lemi about people's money and tell then what is going to happen with their savings
    2-Brace for impact. he's saying that there are anticipated measures the public should know about.

    In the meantime, Salemeh should hang for all the time he wasn't providing the government with factual information.
     
    TayyarBeino

    TayyarBeino

    Legendary Member
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