The data released by the Ministry of Finance (MoF) recently indicated that Lebanon’s gross public debt hit $93.74B in July 2020, thereby recording an annual 9% increase.
The increase is mainly attributed to the 9.53% annual increase in local currency debt (denominated in LBP) which stood at $58.72B in July 2020. As such, domestic debt constituted 62.65% of the total public debt, compared to last year’s smaller share of 62.34%.
Looking at net domestic debt, which excludes public sector deposits with the central bank and commercial banks, it increased by 9.28% annually to $49.23B in July 2020.
Meanwhile, total debt denominated in foreign currency (namely in USD) climbed by a yearly 8.11% totaling $35B over the same period. Therefore, total foreign debt grasped a stake of 37.3% of the total public debt by July 2020, compared to last year’s share of 37.7%. It is worth mentioning that $3.52B represents the Unpaid Eurobonds, their coupons and accrued interests.
Following the default on Eurobond maturity on March 9, 2020, and the subsequent nonpayment of foreign currency debt service, the government presented a restructuring plan on 28 April 2020. Unfortunately, the lack of a unified position and the resignation of the government following the Beirut port blast have further delayed negotiations with bondholders and with the IMF on proceeding with a debt restructuring along with external funding support packages.
Lebanon’s outstanding Eurobond stock amounted to $31 Billion (65.7% of GDP at the end of 2019). As part of the debt restructuring, the devaluation of the currency will increase the valuation of the foreign-currency debt stock as percent of GDP and could result in large losses for bondholders that (according to Moody’s) are expected to exceed 65% of par.
Domestic and Foreign Debt in July ($B)
Source: Mof, BlomInvest Bank