Lebanon, hit by a grinding dollar liquidity crunch amid its worst economic recession in decades, had set the stage for a default on its outstanding $30 billion Eurobonds.
On Monday, Lebanon’s finance ministry said it will “discontinue” payments on all dollar-denominated Eurobonds due in the next 15 years to safeguard dwindling foreign currency reserves.
The finance ministry said it intended to enter into “good faith discussions with its creditors as early” as possible.
“The government has decided to discontinue payments on all of its outstanding Eurobonds,” said a statement posted on the finance ministry’s website.
It has suspended payment of a $1.2 billion Eurobond just before a March 9 deadline and said it would seek restructuring negotiations with creditors over the rest of its debt pile.
Lazard Freres, a firm serving as a financial adviser to the Lebanese government, “has been instructed to initiate arrangements as appropriate under the current circumstances to facilitate such good faith discussions,” the statement said.
The finance ministry said it planned to hold an investor presentation on 27 March, but did not provide more details.
The government must now reach a decision on whether to ask for a bailout from the International Monetary Fund, which has so far only provided Lebanon with technical assistance to deal with its financial crisis.