Euronews is no longer accessible on Internet Explorer. This browser is not updated by Microsoft and does not support the last technical evolutions. We encourage you to use another browser, such as Edge, Safari, Google Chrome or Mozilla Firefox.
BREAKING NEWS

High hopes as Lebanon PM seeks UAE cash for ailing economy

High hopes as Lebanon PM seeks UAE cash for ailing economy
FILE PHOTO: Lebanese Prime Minister-designate Saad al-Hariri speaks during a news conference in Beirut, Lebanon, November 13, 2018. REUTERS/Mohamed Azakir/File Photo -
Copyright
Mohamed Azakir(Reuters)
Euronews logo
Text size Aa Aa

By Lisa Barrington and Stanley Carvalho

ABUDHABI (Reuters) – Lebanon hopes the United Arab Emirates will inject cash into its central bank to help shore up the ailing economy, Prime Minister Saad al-Hariri said on Monday on a visit to the Gulf state in which leaders sought a deal behind closed doors.

Abu Dhabi is hosting a conference at which heavily indebted Lebanon is seeking partnerships and investments in food, infrastructure, oil and gas, and renewable energy.

The UAE economy minister said financing for Lebanon would be discussed, while one of Hariri’s advisers said the mood was “positive” – though no formal announcements had been made by late Monday afternoon.

Faced with one of the world’s highest debt burdens, low growth and crumbling infrastructure, Hariri’s government has vowed to implement long-delayed reforms. It is also seeking to curb a sharp loss of confidence among foreign investors and among depositors who are turning away from the Lebanese pound.

Asked on the conference sidelines whether Lebanon will see a cash injection for its central bank, Prime Minister Saad al-Hariri told Reuters: “We are working on everything,” adding: “Yes we are hoping, we will work on it.”

Financial markets have tightened significantly this year, raising the costs for Lebanon of borrowing and insuring against default. But hopes for a deal boosted dollar-denominated bonds on Monday, which remain down some 15% this year.

The central bank has been drawing down its foreign exchange reserves to repay the state’s maturing dollar-denominated debt, and said last week it was prepared to do more.

Central bank governor Riad Salameh, also attending the conference, said the bank was continuing to provide dollars to local financial markets, adding that Lebanon has “numerous possibilities” as it looks for assistance but it expects support from the UAE.

Lebanon’s traditionally high reserves of foreign currency have been in decline because capital inflows into its banking system from Lebanese abroad have been slowing.

An adviser to Hariri, Ghattas Khoury, told Reuters the mood at the conference was positive and that there would be a meeting between the Lebanese premier and UAE authorities later on Monday.

Beirut, which has debt-to-GDP ratio https://tmsnrt.rs/2Oj0wKg of 140%, hopes its Gulf allies or regional sovereign wealth funds will offer support but no public pledges have so far been made.

UAE economy minister Sultan bin Saeed Al Mansouri told reporters his government believes Lebanon’s investment climate is becoming more “settled”.

He made no financing commitments, but said any financing would “be discussed with the government and they’ll make the right decision.”

Lebanon is preparing to sell a Eurobond of around $2 billion this month, with cash raised earmarked for refinancing maturing debts and shoring up shaky public finances.

On Oct. 1, Moody’s put Lebanon’s Caa1 credit rating under review for downgrade, saying anticipated external financial assistance had not yet been forthcoming.

Ratings agency Fitch downgraded Lebanon to CCC in August, citing debt servicing concerns.

At the same time, S&P Global affirmed Lebanon at B-/B with a negative outlook, saying it considered foreign exchange reserves sufficient to service government debt in the “near term”.

(Additional reporting by Tom Perry and Davide Barbuscia; Writing by Jonathan Spicer; Editing by Gareth Jones)

euronews provides breaking news articles from reuters as a service to its readers, but does not edit the articles it publishes. Articles appear on euronews.com for a limited time.