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Lebanon Studies Eurobond Decision as Due Date Nears

A graffiti that reads in Arabic, "Molotov cocktails are coming," has been painted on a concrete wall installed by authorities to keep anti-government protesters far from the main entrance of the Central Bank, background, during ongoing protests against the Lebanese government, in Beirut, Lebanon, Saturday, Feb. 1, 2020. (AP)
A graffiti that reads in Arabic, "Molotov cocktails are coming," has been painted on a concrete wall installed by authorities to keep anti-government protesters far from the main entrance of the Central Bank, background, during ongoing protests against the Lebanese government, in Beirut, Lebanon, Saturday, Feb. 1, 2020. (AP)
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Lebanon Studies Eurobond Decision as Due Date Nears

A graffiti that reads in Arabic, "Molotov cocktails are coming," has been painted on a concrete wall installed by authorities to keep anti-government protesters far from the main entrance of the Central Bank, background, during ongoing protests against the Lebanese government, in Beirut, Lebanon, Saturday, Feb. 1, 2020. (AP)
A graffiti that reads in Arabic, "Molotov cocktails are coming," has been painted on a concrete wall installed by authorities to keep anti-government protesters far from the main entrance of the Central Bank, background, during ongoing protests against the Lebanese government, in Beirut, Lebanon, Saturday, Feb. 1, 2020. (AP)

Lebanon's cash-strapped authorities are struggling to decide what to do about a $1.2 billion Eurobond maturing in March but are leaning towards repayment for foreign holders and a swap for local investors, political and banking sources said on Tuesday.

Lebanon, which has never defaulted on its hefty debt, is in the throes of a financial and economic crisis that has shattered confidence in banks and ignited protests against a political elite blamed for steering the country towards collapse.

A government source and two senior political sources told Reuters that big differences remained over options: pay in full, ask local holders of the issue to swap for longer-dated notes delaying payment by at least 10 years, or simply not pay.

Two of those sources and three senior bankers said a swap would ease pressure on dwindling foreign currency reserves and buy time. Three sources said the government has not initiated any steps for a default scenario.

Lebanon's dollar bonds have gained in recent days, with the rally particularly pronounced among shorter-term bonds, signaling growing expectations that the government might pay its most immediate debt obligations.

The country has $2.5 billion in principal and $1.9 billion in coupon payments on Eurobonds due in 2020.

The March 2020 issue has added 12% in the past four trading sessions and was trading at 84.6 cents to the dollar on Tuesday, according to RRPSBONDS data.

In contrast, Lebanon's longer-dated bonds are trading at 50 cents to the dollar or lower, indicating a higher probability of a debt default or restructuring at some point.

The government source said that Lebanon, grappling with one of the world's heaviest debt burdens, would not be able to avoid a debt restructuring further down the road and would need assistance from the International Monetary Fund, which would require consensus in Lebanon's fractured political landscape.

"Kicking the can down the road by paying means a lot of money out of scarce resources and there are more maturities coming in April and June, so it's only a few months of extra breathing space," said Paul McNamara, investment director at asset manager GAM.

The two political sources said Prime Minister Hassan Diab preferred making the March payment on time to avoid any blemish on the country's reputation as his government, formed last month, tries to win back the confidence of international donors.

"He does not want to start his term with a default on debt obligations and give any negative sign to the international community," one of the political sources told Reuters.

Rating agencies have warned a swap would constitute a selective default.

One of the senior bankers said he expected the government to ask domestic holders to agree on a swap. "This is bad for the banks ... but it's not like we have much of a choice," he said.

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IMF and Arab Monetary Fund Sign MoU to Enhance Cooperation

The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki - SPA
The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki - SPA
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IMF and Arab Monetary Fund Sign MoU to Enhance Cooperation

The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki - SPA
The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki - SPA

The International Monetary Fund (IMF) and the Arab Monetary Fund (AMF) signed a memorandum of understanding (MoU) on the sidelines of the AlUla Conference on Emerging Market Economies (EME) to enhance cooperation between the two institutions.

The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki, SPA reported.

The agreement aims to strengthen coordination in economic and financial policy areas, including surveillance and lending activities, data and analytical exchange, capacity building, and the provision of technical assistance, in support of regional financial and economic stability.

Both sides affirmed that the MoU represents an important step toward deepening their strategic partnership and strengthening the regional financial safety net, serving member countries and enhancing their ability to address economic challenges.

Business

Saudi Chambers Federation Announces First Saudi-Kuwaiti Business Council

File photo of the Saudi flag/AAWSAT
File photo of the Saudi flag/AAWSAT
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Saudi Chambers Federation Announces First Saudi-Kuwaiti Business Council

File photo of the Saudi flag/AAWSAT
File photo of the Saudi flag/AAWSAT

The Federation of Saudi Chambers announced the formation of the first joint Saudi-Kuwaiti Business Council for its inaugural term (1447–1451 AH) and the election of Salman bin Hassan Al-Oqayel as its chairman.

Al-Oqayel said the council’s formation marks a pivotal milestone in economic relations between Saudi Arabia and Kuwait, reflecting a practical approach to enabling the business sectors in both countries to capitalize on promising investment opportunities and strengthen bilateral trade and investment partnerships, SPA reported.

He noted that trade between Saudi Arabia and Kuwait reached approximately SAR9.5 billion by the end of November 2025, including SAR8 billion in Saudi exports and SAR1.5 billion in Kuwaiti imports.

Business

Leading Harvard Trade Economist Says Saudi Arabia Holds Key to Success in Fragmented Global Economy

Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).
Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).
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Leading Harvard Trade Economist Says Saudi Arabia Holds Key to Success in Fragmented Global Economy

Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).
Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).

Harvard University economics professor Pol Antràs said Saudi Arabia represents an exceptional model in the shifting global trade landscape, differing fundamentally from traditional emerging-market frameworks. He also stressed that globalization has not ended but has instead re-formed into what he describes as fragmented integration.

Speaking to Asharq Al-Awsat on the sidelines of the AlUla Conference for Emerging Market Economies, Antràs said Saudi Arabia’s Vision-driven structural reforms position the Kingdom to benefit from the ongoing phase of fragmented integration, adding that the country’s strategic focus on logistics transformation and artificial intelligence constitutes a key engine for sustainable growth that extends beyond the volatility of global crises.

Antràs, the Robert G. Ory Professor of Economics at Harvard University, is one of the leading contemporary theorists of international trade. His research, which reshaped understanding of global value chains, focuses on how firms organize cross-border production and how regulation and technological change influence global trade flows and corporate decision-making.

He said conventional classifications of economies often obscure important structural differences, noting that the term emerging markets groups together countries with widely divergent industrial bases. Economies that depend heavily on manufacturing exports rely critically on market access and trade integration and therefore face stronger competitive pressures from Chinese exports that are increasingly shifting toward alternative markets.

Saudi Arabia, by contrast, exports extensively while facing limited direct competition from China in its primary export commodity, a situation that creates a strategic opportunity. The current environment allows the Kingdom to obtain imports from China at lower cost and access a broader range of goods that previously flowed largely toward the United States market.

Addressing how emerging economies should respond to dumping pressures and rising competition, Antràs said countries should minimize protectionist tendencies and instead position themselves as committed participants in the multilateral trading system, allowing foreign producers to access domestic markets while encouraging domestic firms to expand internationally.

He noted that although Chinese dumping presents concerns for countries with manufacturing sectors that compete directly with Chinese production, the risk is lower for Saudi Arabia because it does not maintain a large manufacturing base that overlaps directly with Chinese exports. Lower-cost imports could benefit Saudi consumers, while targeted policy tools such as credit programs, subsidies, and support for firms seeking to redesign and upgrade business models represent more effective responses than broad protectionist measures.

Globalization has not ended

Antràs said globalization continues but through more complex structures, with trade agreements increasingly negotiated through diverse arrangements rather than relying primarily on multilateral negotiations. Trade deals will continue to be concluded, but they are likely to become more complex, with uncertainty remaining a defining feature of the global trading environment.

Interest rates and artificial intelligence

According to Antràs, high global interest rates, combined with the additional risk premiums faced by emerging markets, are constraining investment, particularly in sectors that require export financing, capital expenditure, and continuous quality upgrading.

However, he noted that elevated interest rates partly reflect expectations of stronger long-term growth driven by artificial intelligence and broader technological transformation.

He also said if those growth expectations materialize, productivity gains could enable small and medium-sized enterprises to forecast demand more accurately and identify previously untapped markets, partially offsetting the negative effects of higher borrowing costs.

Employment concerns and the role of government

The Harvard professor warned that labor markets face a dual challenge stemming from intensified Chinese export competition and accelerating job automation driven by artificial intelligence, developments that could lead to significant disruptions, particularly among younger workers. He said governments must adopt proactive strategies requiring substantial fiscal resources to mitigate near-term labor-market shocks.

According to Antràs, productivity growth remains the central condition for success: if new technologies deliver the anticipated productivity gains, governments will gain the fiscal space needed to compensate affected groups and retrain the workforce, achieving a balance between addressing short-term disruptions and investing in long-term strategic gains.