Lebanon's Debt Restructuring Plan: Hope or Hurdle?

Lebanon's cabinet is expected to review a debt restructuring plan aiming to secure an IMF loan, following years of economic turmoil caused by excessive spending. The plan, which involves financial loss distribution among banks, the government, and depositors, faces scrutiny over its reliance on gold reserves and potential drawbacks.

Lebanon might soon see the long-anticipated introduction of a debt restructuring plan as both a new president and prime minister prioritize economic reform. Years of rampant spending catapulted the nation into a downturn, locking depositors out and shutting banks until political will shifted toward securing an IMF loan.

The plan centers on distributing financial losses more equitably among the state, banks, and depositors. A draft law, destined for cabinet review, could be pivotal in determining the fate of Lebanon's financial recovery. Critical elements such as loss clawbacks and asset-backed bonds, potentially involving the nation's gold reserves, remain subjects of intense debate.

Tensions further cloud the recovery landscape as experts highlight potential issues with the plan's alignment to IMF standards and its equitable treatment of smaller depositors. Meanwhile, political strains persist both domestically and internationally, challenging Lebanon's path to economic stability and reform.

(With inputs from agencies.)