Lebanon’s central bank is ready to repay the state’s maturing dollar-denominated debt to protect the country’s credibility with the markets, Governor Riad Salameh said on Thursday.
One of the world’s most heavily indebted states, Lebanon has a $1.5 billion Eurobond maturing in November.
“The maturities that the Lebanese state has, we have also prepared for them, to pay for them in dollars,” Salameh told a conference. “I believe this matter is essential, and Banque du Liban is carrying this out for monetary reasons (and) for the protection of Lebanon’s credibility.”
He also said the central bank would continue to “preserve the stability” of the official pegged exchange rate. The Lebanese pound has been pegged against the dollar at a level of 1,507.5 pounds for more than two decades.
Public concerns over the economy have intensified recently as the cost of dollars rose in the black market over the pegged rate. The central bank introduced new steps on Tuesday to organize the provision of dollars for key imports.
Salameh also expressed hope that the government would seek to narrow its budget deficit to help the country’s finances and reassure the markets.
“We hope the government implements a budget for 2020 that gives a positive signal to the markets by reducing the deficit,” Salameh added.
Lebanon’s government has declared “an economic emergency” to try to get its finances under control.
Finance Minister Ali Hassan Khalil told Reuters this week that Lebanon has begun preparing to issue a Eurobond of around $2 billion in October to meet state financing needs.
Lebanon central bank ready to repay state’s maturing dollar debt: Salameh