Lebanon will not pay upcoming bond maturities to provide citizens’ ‘basic needs’

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The Lebanese government voted on Saturday to default on payment of a $1.2 billion Eurobond maturing on March 9, vowing to use the funds to provide the population with their basic needs.

“How can we make outside payments when there are people who cannot even afford bread,” Prime Minister Hassan Diab said following a Cabinet session held at the presidential palace.

He explained that the decision was taken because Lebanon was simply unable to pay its upcoming maturities. This is the first time Lebanon has failed to meet its foreign debt obligations.

“The reserves of hard currency have reached a critical and dangerous level … and the public debt became larger than Lebanon could bear,” Diab said.