Lebanon faces a "tough task" ahead to secure funds from the International Monetary Fund after Lebanese authorities began technical talks with the multilateral lender last week to pull the country out of its deep financial crisis, according to Capital Economics.
For starters, the debt-laden country will have to restructure its defaulted Eurobond debt to even secure an IMF deal, as the fund will not lend if it considers a country’s debt to be unsustainable, Capital Economics said in its Mena Economics Weekly report.
"Given previous attempts to negotiate with foreign creditors, this will prove difficult," the UK economic research consultancy said. "Haircuts of over 90 per cent may be needed and complications with collective action clauses will lengthen the process."
Lebanon is suffering from one of the world's deepest economic depressions on record and an IMF deal is widely seen as the only way for the economically vulnerable country to unlock desperately needed aid. Lebanon defaulted on about $31 billion of Eurobonds in 2020. Its currency has lost more than 90 per cent of its value against the US dollar, leading to surging inflation, increased unemployment and poverty.
Lebanon must undertake a "mammoth to-do list" as part of any IMF deal, according to Capital Economics.
At the top of that list is overhauling its banking sector.
"Local banks hold a large share of the defaulted debt and the required write-downs could wipe out their capital and require the government to recapitalise at a very high cost," the report said.
The Lebanese pound will also need to be devalued and the exchange rate system simplified.
With the currency trading at a discount of more than 90 per cent to the official dollar peg on the black market, Lebanese officials are likely to need to weaken the currency on par with this level, according to Capital Economics.
The tasks ahead are now further complicated by parliamentary elections to be held in March.
"While this supports efforts to promote democracy and tackle corruption, it sets a deadline for the incumbent government to have completed these huge challenges or risk elongating the country’s economic pain," the report said.
Lebanon’s economic crisis ranks among the world’s top 10 crises – possibly even the top three – since the mid-19th century, the World Bank said in June.
Lebanon's economy fell to an estimated $33bn in 2020, from nearly $55bn in 2018. The economy shrank by 20.3 per cent last year, after a 6.7 per cent contraction the previous year, according to the World Bank.
Lebanon’s private sector continued to shrink in September owing to a decline in output and new orders as fuel shortages compounded political instability and weak domestic demand.
The Blom Lebanon PMI, which measures operating conditions in the private sector, rose to 46.9 last month, registering only a marginal increase from 46.6 in August. A reading below the 50 neutral mark indicates a contraction.
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BMW M5 specs
Engine: 4.4-litre twin-turbo V-8 petrol enging with additional electric motor
Power: 727hp
Torque: 1,000Nm
Transmission: 8-speed auto
Fuel consumption: 10.6L/100km
On sale: Now
Price: From Dh650,000
Volvo ES90 Specs
Engine: Electric single motor (96kW), twin motor (106kW) and twin motor performance (106kW)
Power: 333hp, 449hp, 680hp
Torque: 480Nm, 670Nm, 870Nm
On sale: Later in 2025 or early 2026, depending on region
Price: Exact regional pricing TBA
If you go
Flight connections to Ulaanbaatar are available through a variety of hubs, including Seoul and Beijing, with airlines including Mongolian Airlines and Korean Air. While some nationalities, such as Americans, don’t need a tourist visa for Mongolia, others, including UAE citizens, can obtain a visa on arrival, while others including UK citizens, need to obtain a visa in advance. Contact the Mongolian Embassy in the UAE for more information.
Nomadic Road offers expedition-style trips to Mongolia in January and August, and other destinations during most other months. Its nine-day August 2020 Mongolia trip will cost from $5,250 per person based on two sharing, including airport transfers, two nights’ hotel accommodation in Ulaanbaatar, vehicle rental, fuel, third party vehicle liability insurance, the services of a guide and support team, accommodation, food and entrance fees; nomadicroad.com
A fully guided three-day, two-night itinerary at Three Camel Lodge costs from $2,420 per person based on two sharing, including airport transfers, accommodation, meals and excursions including the Yol Valley and Flaming Cliffs. A return internal flight from Ulaanbaatar to Dalanzadgad costs $300 per person and the flight takes 90 minutes each way; threecamellodge.com
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
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Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
Ferrari 12Cilindri specs
Engine: naturally aspirated 6.5-liter V12
Power: 819hp
Torque: 678Nm at 7,250rpm
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What's in the deal?
Agreement aims to boost trade by £25.5bn a year in the long run, compared with a total of £42.6bn in 2024
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India will also cut automotive tariffs to 10% under a quota from over 100% currently.
Indian employees in the UK will receive three years exemption from social security payments
India expects 99% of exports to benefit from zero duty, raising opportunities for textiles, marine products, footwear and jewellery
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MATCH INFO
Uefa Champions League semi-final:
First leg: Liverpool 5 Roma 2
Second leg: Wednesday, May 2, Stadio Olimpico, Rome
TV: BeIN Sports, 10.45pm (UAE)
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