Experts: Qatar's decision to buy bonds strengthens confidence in the Lebanese economy

Waseem Al-Zuhairi-Beirut

The extent of the financial and economic difficulties and challenges faced by Lebanon, which is burdened by debt and stagnation and the failure of reforms, is no longer hidden, in addition to the increasing corruption in many sectors.

At a time when domestic and international warnings were on the rise towards financial slippages due to the political crisis, most recently Moody's downgraded Lebanon's credit rating. The Qatari government announced its intention to buy Lebanese government bonds worth half a billion dollars as an important positive indicator of the Lebanese economic reality in general and markets Local.

Qatar's Deputy Prime Minister and Foreign Minister Sheikh Mohammad bin Abdulrahman al-Thani said the decision was aimed at supporting the Lebanese economy and reiterated his country's commitment to supporting Lebanon in light of the many challenges facing it.

Enhancing confidence in publications
The Lebanese Finance Minister in the caretaker government, Ali Hassan Khalil, said that Qatar's subscription to treasury bonds strengthens confidence in the Lebanese publications, which is appreciated, hoping that it will be an introduction to the involvement of more countries and institutions in supporting Lebanon.

"The Moody's report confirms the need to accelerate the formation of a government to launch the process of financial reform, adding that the financial and monetary situation maintains its stability and the needs of the treasury is secure and able to meet all commitments, especially debt.

The Qatari step in which the economist Ghazi Wazni saw a message of confidence in Lebanon and its ability to pay its debts in principle, and considered that the purchase of bonds would reassure the global financial markets, investors and depositors.

Wazni told Al-Jazeera Net that the Qatari decision would lead to increased financial flows to Lebanon, which would enhance monetary stability and improve the balance of payments.

He considered that one of the important benefits of the Qatari government's step is that it is soft bonds for interest and maturity, as well as bonds to finance public debt on concessional terms rather than increasing it.

The size of public debt
Lebanon is under debt burdens of nearly $ 85 billion, representing about 155% of GDP.

The fiscal deficit is 10.6% of GDP, and the electricity sector is one of the largest and most expensive sectors on the public treasury.

While financial experts confirm Lebanon's monetary stability despite the country's economic and financial difficulties as a result of weak growth, declining financial flows and a growing deficit and public debt, the country's decision to buy Treasury bonds to relax the markets and give a large boost.

In this context, the financial and economic expert Charbel Qardahi said that the prices of Lebanese bonds abroad had previously declined because many investors sold those bonds because of what they considered risks, which led to the increase of interest owed by Lebanon.

Qardahi pointed out in an interview with Al Jazeera Net that the Qatari government's move to buy from secondary markets led to higher bond prices and thus lower interest rates.

He said that the importance of this step is that there is a big market in the market, that is, the Qatari government in the amount of 500 million dollars, equivalent to 10% of the value of Lebanese bonds of $ 5 billion.

This allowed Lebanon not to pay more for debt or to refinance debt.

Qardahi said that the most important now remains the formation of a government able to develop an integrated reform program and take steps to reduce expenditures in the public sector and reduce the benefits on public debt.