Foreign Debt Restructuring and Sustainability: A Note on Lebanon
| Table 1: Bn USD | D | E | GNP | BDL’s NFR | E/GNP% | D/GNP% |
| 2015 | 27.1 | 25 | 52.8 | 7.2 | 47.3 | 51.3 |
| 2016 | 28.2 | 26 | 52.8 | -0.4 | 49.2 | 53.4 |
| 2017 | 30.4 | 28.1 | 54 | -8.5 | 52.0 | 56.3 |
| 2018 | 33.5 | 31.3 | 55.2 | -15.4 | 56.7 | 60.7 |
| 2019 | 33.8 | 31.7 | 53.5 | -32.4 | 59.3 | 63.2 |
| 2020 | 36.1 | 33.9 | 35.3 | -50.7 | 96.0 | 102.3 |
| 2021 | 38.6 | 36.5 | 26.9 | — | 135.7 | 143.5 |
| 2022 | 41.3 | 39.2 | 25.9 | — | 151.4 | 159.5 |
| Source: MOF; CAS; Alvarez and Marsal | ||||||
| Table 2:
Bn USD |
Goods | Services | Income
(NFI) |
Transfers
(NT) |
CA | CA/GNP% |
| 2015 | -13.6 | 2.2 | -0.5 | 3.4 | -8.5 | -16.1 |
| 2016 | -14 | 1.9 | -0.8 | 2.5 | -10.5 | -19.9 |
| 2017 | -14.4 | 1.3 | -0.2 | 1.2 | -12.1 | -22.4 |
| 2018 | -15.1 | 1.4 | -1.1 | 1.4 | -13.4 | -24.3 |
| 2019 | -13.4 | 0.4 | -1.2 | 3.1 | -11.1 | -20.7 |
| 2020 | -6.5 | 0.1 | -1 | 4.7 | -2.8 | -7.9 |
| 2021 | -8.2 | 1 | -1.5 | 5.3 | -3.4 | -12.6 |
| 2022 | -13.6 | 2.1 | -0.6 | 5.7 | -6.5 | -25.1 |
| Source: BDL; CAS
Note: D=Foreign Debt; E=Eurobonds; GNP=Gross National Product; |
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| NFR= Net Foreign Reserves; CA=Current Account; NFI=Net Factor Income; NT=Net Transfers
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In an interesting article written recently[1], the ex-Minister of Labor and the eminent corporate lawyer, Mr Camille Abu Sulieman, argued that the Lebanese government (LG) needs to negotiate and come to an agreement with its foreign creditors soon, for two main reasons. First, it is high time to do so after more than four years since it has defaulted!. Second, and more important, come March 2025, or after five years since default in March 2020, the creditors will lose under the stipulations of the Eurobond issues access to their interest payments[2]; so to avert that, they will most likely take the LG to court in New York City, and any court ruling in their favor will bind the LG to paying them, irrespective of the collective action clauses[3]. As such, the LG has an incentive to strike a deal before that date. The article also argued that, as is commonly the case in these circumstances, a deal with the IMF is indispensable so as creditors will be confident that debt service will be honored after restructuring.
