Beirut - Lebanon's government formed a committee to study how to deal with looming sovereign debt maturities, including a $1.2 billion Euro bond maturing in March, local TV stations al-Jadeed and LBC said.
Lebanon is studying options for dealing with its forthcoming Euro bond maturities including whether or not to pay the debt, the finance minister said on Thursday after a meeting with the president and central bank governor.
The heavily indebted state is facing a financial crisis and must quickly decide whether to repay its maturing foreign currency debt on time, including a $1.2 billion Euro bond due on March 9.
Sources familiar with the matter told Reuters on Wednesday the mood in government was leaning toward negotiating a restructuring of the debt.
Finance Minister Ghazi Wazni, speaking after Thursday’s meeting, said numerous options for dealing with the Eurobonds were discussed.
“These options, each of them was studied in depth - whether to pay or not to pay - and everyone expressed their view frankly in this matter,” Wazni said in a news conference.
“The decision ... was that we will continue to study in the coming period so we can take this decision,” he said.
The decision was “not easy” and “very important” for Lebanon, depositors, banks, the economy and Lebanon’s foreign relations, he said.
Wazni also said the government would issue a circular in coming days on regulating informal capital controls that are being enforced by commercial banks to bring “clarity” and protect depositors.
Banks have been greatly curtailing depositors’ access to their savings in foreign currency and blocking most transfers abroad since October, in an effort to prevent capital flight.
Wazni said banks could no longer deal with depositors in a way that was illegal and unclear.
Lebanon on Wednesday formally requested the International Monetary Fund’s technical help in shoring up its economy.
The financial crisis, worse than any Lebanon endured in its 1975-90 civil war, came to a head last year as slowing capital inflows led to a liquidity crunch and demonstrations erupted against the ruling elite.