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Elaf from Dubai: Economic news reports said that investors in Lebanese bonds may lose 75 percent of the value of their investments, if the new government settles the losses of the financial system and begins implementing reforms and opening the door to obtaining financing from the International Monetary Fund, according to a report issued by Goldman Sachs Bank.
According to Al-Sharq website, Lebanon has been in default of its international debt obligations since March 2020, due to years of political turmoil and mismanagement of the economy, and due to servicing a debt that Goldman Sachs estimates to exceed 300% of GDP at current market exchange rates.
“Goldman Sachs” pointed out that the Lebanese parliament’s approval of Najib Mikati’s government on Monday “represents the first step on a long, difficult and risky road to achieving economic recovery.”
According to Al-Sharq, Goldman Sachs’ debt settlement expectations are based on assumptions, including an improvement in the value of the Lebanese currency to reach 8000 pounds against the dollar in the medium term, compared to about 14,500 pounds to the dollar in the parallel market currently. In addition to negative or low interest rates on public debt, certain rates of economic growth, and adjusting the balance of public finances… “In light of these assumptions and restrictions, we arrive at an estimated reduction in the face value of current bonds of 75%.”