Socialist Worker

Lebanon debt default sparks IMF fear

Issue No. 2695

A solidarity protest with Lebanon in Berlin last year

A solidarity protest with Lebanon in Berlin last year (Pic: flickr)

Lebanon defaulted on a foreign debt payment for the first time in its history this week.

The government failed to pay a £900 billion debt due on Monday, in the context of a national financial crisis.

Prime minister Hassan Diab said, “The debt has become bigger than Lebanon can bear, and bigger than the ability of the Lebanese to meet interest payments.”

As Diab seeks to restructure the Lebanon’s debt, more than 40 percent of the population live on the brink of poverty.

The value of the Lebanese pound has been sinking for months, partly because of how it’s valued against the dollar.

The financial crisis has destroyed public services, and Lebenese residents regularly suffer electricity and water supply cuts.

Now the government in Lebanon is refusing to pay back the money, the International Monetary Fund (IMF) may start circling with a “rescue package”.

But IMF cash is likely to come with strings that lock the country into agreements to privatise services and pay hugely inflated interest rates.

A mass movement in October 2019 forced prime minister Saad Harari to resign, as price and tax rises sparked huge protests.

Such protests will be needed again.

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