Lebanon’s Finance Ministry said Monday it has resumed “interactions” with the International Monetary Fund in an effort to pull the small country out of the worst financial disaster in its modern history.
The ministry said the government will work for a fair solution for creditors, however did now not give details about the talks. The announcement came a week after the new Cabinet named a delegation to resume bailout negotiations with the international agency after talks had been suspended last year.
Deep disagreements festered within the Lebanese delegation during last year’s negotiations with the IMF, with the government on one aspect and the central bank and local lenders on the other.
The ministry said that Lebanon’s government “remains entirely dedicated to interacting in a constructive, transparent and equitable debt restructuring process” with all different stakeholders and welcomes bondholders to participate in the process.
In early March 2020, Lebanon defaulted on paying again $1.2 billion in loans, marking its first-ever default. Since the disaster began in October 2019, the local currency has lost more than 90% of its value.
Days after the default in March remaining year, the government said Lebanon will stop paying all maturing Eurobonds in foreign currencies that are believed to be worth about $30 billion. Lebanon’s complete debt is about $90 billion, of which about $60 billion are in the Lebanese pound, making it one of the highest in the world.
The situation has become much worse since with billions of greenbacks of foreign currency reserves spent on subsidies and the crash of the Lebanese pound left more than 70% of Lebanon’s population of 6 million people, along with 1 million Syrian refugees, in poverty, in accordance to the U.N.
The Finance Ministry said Lebanon’s government-led through Prime Minister Najib Mikati reiterates its commitment to a “fair and comprehensive solution” for all creditors.
The World Bank stated in June that Lebanon’s severe financial and economic disaster is likely to rank as one of the worst the world has viewed in more than 150 years.
The World Bank said Lebanon’s gross domestic product is projected to contract 9.5% in 2021, after shrinking by 20.3% in 2020 and 6.7% the 12 months before.