Beirut (AFP)

Lebanon, stuck in a serious economic crisis and now in default, has promised to initiate a series of reforms which will constitute a litmus test for the new government, appointed in response to the popular protest movement shaking the country.

"The real question, will politicians do whatever is necessary to resolve the problem?" Wonders Sami Nader, director of the Levant Institute for Strategic Affairs.

"If the default is not accompanied by a clear commitment to reform, it will accelerate the collapse," he warns.

Prime Minister Hassan Diab announced on Saturday that Lebanon will not be able to repay 1.2 billion Eurobonds - bonds issued in dollars - which mature on Monday.

Faced with this first default in the history of the country, Mr. Diab said he had implemented an upcoming debt restructuring, after negotiations with creditors.

This is just the latest rebound to illustrate the economic collapse, which has been going on for several months, of a country with stagnant growth, affected by a sharp depreciation of its currency and drastic restrictions on dollar withdrawals in banks.

With debt of 92 billion dollars - 81.5 billion euros, or about 170% of GDP - Lebanon is also one of the most indebted countries in the world.

The economic slump was also one of the main drivers of the unprecedented demonstrations launched in October, which saw tens, if not hundreds, of thousands of Lebanese beat the pavement to castigate a political class accused of corruption and powerlessness in the face of crisis.

- IMF, only option? -

Appointed in January to respond to the aspirations of the street, the government is hammering out its desire to clean up public finances and adopt reforms awaited for years.

But in a country accustomed to endless political negotiations between major parties, experts fear procrastination.

Lebanon has in any case already requested technical assistance from the International Monetary Fund (IMF) to implement "reforms", supposed to restore stability and growth.

In February, the Prime Minister received a delegation from the institution in Beirut. For the time being, financial assistance is not on the agenda. But the scale of the crisis is such that a financial rescue plan seems essential, according to experts.

"The IMF is the only option to move forward," said Nader.

For Marwan Barakat, head of the research department at Bank Audi, the authorities' reform plan must notably guarantee "austerity" in terms of public spending, but also "an improvement in tax collection, a reduction of debt service and reform of the electricity sector ", a real financial abyss.

Regarding IMF financial assistance, the political class remains deeply divided.

The powerful Shiite Hezbollah movement, which dominates Parliament with its allies, is hostile to this option. In a statement Thursday, he warned of "conditions" imposed by "any international organization", fearing "foreign guardianship".

- "Bankruptcy" -

In its editorial on Sunday, the daily Annahar highlighted the "risks" to which Lebanon was exposed with its default.

Especially since the government has embarked on this path "without the IMF, a necessary international mediator who could have helped Lebanon and provided it with cover vis-à-vis the creditors", he judges.

Referring to the threat of legal proceedings, the daily indicates that Lebanon must find a "consensus" with its creditors concerning the negotiations on the restructuring of the debt.

And for fruitful discussions, the "main prerequisite" is a "feasible and credible economic rescue plan", warns Mohamad Faour, post-doctoral fellow specializing in finance at University College Dublin.

"From the creditors' point of view, ideally this would be part of an IMF support plan, which would give Lebanon leverage in its negotiations," he said.

The current crisis is the worst in the history of Lebanon since the end of the civil war (1975-1990).

On Saturday, Diab pledged to cut public spending and carry out the reforms promised in 2018 as part of an international aid conference, to get $ 11.6 billion (10.3 billion d 'euros) of donations and loans.

In the absence of any real change on the reform front in Lebanon, these sums have still not been released.

In a video posted on Facebook, former Minister of Labor and professor at the American University of Beirut Charbel Nahas castigated the authorities and announced their default.

"It is not a real decision," he said. "It is just the recognition of a certain reality, characterized by the bankruptcy of the State, the Central Bank and the commercial banks."

© 2020 AFP