Lebanon: Creditors Divided over Draft Financial Restructuring Plan

Demonstrators carry national flags during an anti-government protest in downtown Beirut, Lebanon October 20, 2019. REUTERS/Ali Hashisho
Demonstrators carry national flags during an anti-government protest in downtown Beirut, Lebanon October 20, 2019. REUTERS/Ali Hashisho
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Lebanon: Creditors Divided over Draft Financial Restructuring Plan

Demonstrators carry national flags during an anti-government protest in downtown Beirut, Lebanon October 20, 2019. REUTERS/Ali Hashisho
Demonstrators carry national flags during an anti-government protest in downtown Beirut, Lebanon October 20, 2019. REUTERS/Ali Hashisho

Lebanon's international and local creditors are at odds over a draft plan on tackling the country's crippling financial crisis.

A number of international holders of Lebanon's more than $30 billion Eurobonds are broadly supportive of the proposal, which estimates Lebanon will need external financing of $10 billion-$15 billion over the next five years.

They also say it can act as a blueprint to seek IMF financial support, Reuters reported.

This comes as the coronavirus lockdown has compounded economic problems which include a weakening currency and capital controls that have denied savers access to dollar savings.

Meanwhile, a letter from investment bank Houlihan Lokey, adviser to the Association of Banks in Lebanon (ABL), to investment bank Lazard, the Lebanese government's adviser, expresses concerns about the plan, its impact on the banking system and its proposal to impose a financial burden on depositors.

"Lebanese commercial banks are the single largest constituency of Eurobonds' holders, which should be used to the advantage of the government and country as a whole to come up with a credible restructuring plan that ensures that the heavy debt burden is addressed while protecting the health of the banking sector and, more importantly, depositor monies," said the letter, seen by Reuters.

The plan, which is still being discussed by cabinet, was drawn up in the wake of Lebanon last month defaulting on its hefty foreign currency debt.

At a media briefing on the government's economic plan on Thursday, finance ministry advisers described it as subject to revision as the government holds talks with various stakeholders.

Figures such as the $83.2 billion in banking sector losses could change amid negotiations with bondholders that will determine the discount taken by foreign and local holders of debt.

Adviser Alain Biffani said the plan did not mean the government would necessarily resort to an IMF programme, but targets on things like the deficit and exchange rate provided a strong starting point and were largely in line with the fund's requirements.

One of the more contentious parts of the proposal has been a reference to "a transitory exceptional contribution from large depositors."

Lebanon's Parliament Speaker Nabih Berri this week said people's bank deposits were "sacred" and must not be touched.

"Before asking the public to directly assume responsibility for any portion of this problem, a complete and independent audit of historical government expenditures and finances must be prepared and made public," the letter from Houlihan Lokey said, adding ABL agreed external funding from the IMF will be necessary.

Steffen Reichold, portfolio manager at Stone Harbor Investment Partners, described the plan as a "serious blueprint."

"With a plan like this you could get the IMF onboard," he said.

"Putting the debt on a sustainable path, restructuring all key institutions, wiping out all the capital of the banks, introducing a flexible exchange rate, reforming the electricity company - this is all the stuff that would be on the IMF’s likely list of requirements."

Based on calculations from the plan, Reichold said it appeared the government was looking at a roughly 75% haircut on the principal on Eurobonds and domestic debt, which is broadly in the range of what he had expected.

Lebanon's bonds have tumbled to around 15-19 cents on the dollar in recent weeks, with global market turmoil further dimming recovery value prospects for creditors.



Bahraini Transport Minister to Asharq Al-Awsat: Each Country to Finance Its Share of Gulf Railway Project

A conceptual rendering of the Gulf railway interconnection project. (X)
A conceptual rendering of the Gulf railway interconnection project. (X)
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Bahraini Transport Minister to Asharq Al-Awsat: Each Country to Finance Its Share of Gulf Railway Project

A conceptual rendering of the Gulf railway interconnection project. (X)
A conceptual rendering of the Gulf railway interconnection project. (X)

The Gulf Cooperation Council (GCC) member states took a new step toward completing the railway interconnection project by signing the project's general agreement in Bahrain on Sunday. This comes as part of efforts to establish an integrated transport network linking the six nations and boosting the movement of passengers, goods, and commercial trade among them.

Bahraini Minister of Transportation and Telecommunications Dr. Sheikh Abdulla bin Ahmed Al Khalifa told Asharq Al-Awsat that each country will fund and execute the portion of the project located within its territory.

Meanwhile, the costs, fees, and expenses associated with the shared interconnection components among member states will be determined collectively, he added.

He explained that the agreement establishes a joint framework for the project's execution and operation, while defining the obligations of member states and their coordination mechanisms.

He noted that the network, which extends some 2,117 kilometers, aims to transport 6 million passengers and 200 million tons of freight by 2030, with the figures projected to rise to more than 8 million passengers and 271 million tons of freight by 2045.

The project spans from Kuwait, passing through Saudi Arabia, Bahrain, Qatar, and the UAE, all the way to Oman, with the goal of achieving full network operations by December 2030.

According to the minister, interconnection lines between adjacent countries can become operational as soon as their components are completed, without the need to wait for the entire Gulf network to be finalized.

National financing and potential partnerships

On private sector participation, Al Khalifa said that it remains one of the viable options for financing, executing, or operating certain components of the project, depending on the outcomes of economic and financial studies. He stressed that there is no unified public-private partnership model approved across the entire network.

There are currently no pre-existing agreements with specific international partners to finance or execute the project, he said. However, the expertise of global companies in the fields of design, engineering, technology, and operating systems could be utilized based on the project's needs and its various phases.

Bahraini Minister of Transportation and Telecommunications Dr. Sheikh Abdulla bin Ahmed Al Khalifa.

Concerning the project's announced completion rate, the minister explained that the 50 percent figure represents the average progress achieved across member states, and does not mean that half of the construction work for the entire Gulf network has been completed.

The project's cost estimates are currently undergoing review and updates in light of economic shifts, rising prices for materials and services, construction costs, and inflation, he revealed without specifying an updated total cost at the present time.

Returns beyond passenger and freight transport

Al Khalifa said that the economic impact of the project is not limited to facilitating passenger movement and freight transport, but extends to improving supply chain efficiency, boosting trade among GCC countries, and linking industrial centers, economic zones, and logistical hubs, as well as supporting employment and investment opportunities.

He added that determining the project's exact contribution to the gross domestic product (GDP) or estimating expected savings in time and costs remains premature, given that returns vary depending on transport routes, the nature of the cargo, and the points of origin and destination.

In light of the challenges facing maritime navigation in the region, the minister stressed that the Gulf railway network is not intended to serve as a substitute for maritime transport. Instead, it acts as a complementary route that boosts transport options and connectivity among GCC nations, increasing the resilience of supply chains against disruptions that could affect various modes of transportation.

He noted that integration between ports, roads, railways, and airports will strengthen the flexibility of the Gulf transport system, while connecting to broader international logistical corridors remains a future possibility contingent on completing studies, understandings, and coordination with the relevant countries and entities.

King Hamad Bridge to link Bahrain and Saudi Arabia

Regarding the connection between Bahrain and Saudi Arabia, Al Khalifa explained that the King Hamad Bridge project includes road lanes and railway lines, enabling the international passenger station in Bahrain to connect with the Saudi railway network and forming one of the essential components for completing the Gulf interconnection.

He added that work is underway on the privatization procedures for the King Fahd Causeway Authority, alongside completing the necessary studies and procedures to transition to the execution of the new bridge project.

Achieving the connection between Bahrain and Saudi Arabia is a fundamental requirement for operating the railway line between the two countries within the project's targeted timeframe in December 2030,e he said.


Egypt Seeks Faster Progress on Libya Gas, Refining and Power Projects

Egyptian Foreign Minister Badr Abdelatty speaks during a press conference with Minister of Information Diaa Rashwan (not pictured) in Cairo, Egypt, March 25, 2026. (Reuters)
Egyptian Foreign Minister Badr Abdelatty speaks during a press conference with Minister of Information Diaa Rashwan (not pictured) in Cairo, Egypt, March 25, 2026. (Reuters)
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Egypt Seeks Faster Progress on Libya Gas, Refining and Power Projects

Egyptian Foreign Minister Badr Abdelatty speaks during a press conference with Minister of Information Diaa Rashwan (not pictured) in Cairo, Egypt, March 25, 2026. (Reuters)
Egyptian Foreign Minister Badr Abdelatty speaks during a press conference with Minister of Information Diaa Rashwan (not pictured) in Cairo, Egypt, March 25, 2026. (Reuters)

Egypt aims to accelerate energy projects with Libya, including gas pipeline links, refining of Libyan crude in Egypt and an electricity interconnection, Egyptian Foreign Minister Badr Abdelatty said late on Saturday.

Abdelatty's comments were in ‌a ministry ‌statement after a meeting ‌with ⁠Libya’s acting oil ⁠and gas minister Khalifa Abdulsadek in Tripoli.

Abdelatty also ‌called for cooperation on petroleum products and the completion of projects to refine Libyan ‌oil in Egypt and re-export it, the statement said, ⁠adding ⁠that Abdulsadek had said that Libya would continue implementing existing projects and would visit Cairo soon to continue technical talks with Egypt’s petroleum and electricity ministers.

The statement did not provide details on costs or the status of the projects.


GCC: Railway Agreement Sets Joint Framework for Project Implementation and Operation

GCC transport ministers pose for a group photo following the 27th committee meeting in Kuwait. (GCC Railway Authority)
GCC transport ministers pose for a group photo following the 27th committee meeting in Kuwait. (GCC Railway Authority)
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GCC: Railway Agreement Sets Joint Framework for Project Implementation and Operation

GCC transport ministers pose for a group photo following the 27th committee meeting in Kuwait. (GCC Railway Authority)
GCC transport ministers pose for a group photo following the 27th committee meeting in Kuwait. (GCC Railway Authority)

Jasem Albudaiwi, secretary-general of the Gulf Cooperation Council (GCC), said on Sunday that the signing of the General Agreement on the GCC Railway Project marked an important step toward establishing an integrated regional transport network.

He said the network would facilitate the movement of citizens and residents, ease freight transport, boost intra-GCC trade efficiency and strengthen member states’ economic competitiveness and the region’s position in regional and international trade.

Albudaiwi's remarks came at the signing ceremony in the Bahraini capital, Manama, on Sunday, held under the patronage and in the presence of Bahrain’s Crown Prince and Prime Minister Salman bin Hamad Al Khalifa.

He said the project reflected the GCC’s shared ambition to connect member states and improve mobility and trade by linking their economic and industrial hubs, ports and logistics centers.

He added that the project would create opportunities for safe, reliable, affordable and environmentally friendly transport services that meet development needs, serve the aspirations of future generations and strengthen economic integration among GCC states.

Albudaiwi said the agreement sets a common framework for member states to implement and operate the project in coordination with their national railway networks, while establishing mechanisms and a timetable to accelerate its completion.

Albudaiwi praised GCC leaders and transport ministers for their support of strategic regional projects, thanking Bahrain’s crown prince and prime minister for hosting the signing ceremony and officials for advancing the railway project.