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French minister: If Lebanon needs financial aid, France will be there

Lebanon's long-brewing economic crisis spiralled last year as country's capital inflows slowed and protests erupted against ruling elite
French Finance Minister Bruno Le Maire briefs journalists during G20 finance ministers meeting in Saudi capital Riyadh on Saturday (AFP)

France is ready to support Lebanon financially - bilaterally or multilaterally - its finance minister said on Sunday, warning against mixing economic recovery in the country with US-led efforts to counter Iran in the region.

"France always stands ready to help Lebanon. It has always been the case in the past and it will be the case in the future," Bruno Le Maire told Reuters in an interview at the end of a meeting of finance officials from the Group of 20 (G20) major economies in the Saudi capital Riyadh.

"If there is any help required from Lebanon, France will be there."

Lebanon's long-brewing economic crisis spiralled last year as the country's capital inflows slowed and protests erupted against the ruling elite.

Since protests erupted in October, Lebanon's currency has slumped by roughly 60 percent on a parallel market, dollars have become scarce, prices have spiked and thousands of jobs have been shed.

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As the crisis deepens, hitting ordinary Lebanese hard, there has been little sign of foreign aid.

Western and Sunni-led Gulf Arab states that helped in the past have made clear that any support hinges on Beirut implementing long-delayed reforms to address root causes such as state corruption and bad governance.

Saudi Arabia's finance minister said on Sunday the kingdom was in contact with allies and international bodies to coordinate any support for Lebanon on the basis of economic reforms proposed by Beirut.

An International Monetary Fund (IMF) team has discussed possible options in recent meetings with Lebanese officials who are seeking technical advice for tackling the crisis as Beirut mulls a plan for dealing with fast-approaching debt payments.

Lebanon has a $1.2bn Eurobond maturing on 9 March and is apparently seeking advice on whether to pay it, MEE has reported.

Lebanese politicians are divided over repaying about $6bn of Eurobond principal and coupon payments that will come due this year, Bloomberg reported earlier. Some think the government should engage with bondholders to restructure its debt and save what’s left of its reserves to support imports of essential goods.

Others argue that the country should pay in full and preserve its reputation in the international market. Lebanon has never defaulted on its debt.

Le Maire said decisions by Lebanon's government were urgently needed to improve the situation on the ground. "We want to move in the official fora and we think that the IMF might have a role to play at one stage, but it's up to the Lebanese government to decide," he said.

"But if there is any need for help, either bilateral or multilateral, we stand ready to help."

Lebanese Prime Minister Hassan Diab's government took office last month with the backing of Hezbollah, the Iran-backed Shia group, and its allies, as Washington presses its policy of "maximum pressure" against Iran with wide-ranging sanctions.

"We know that there are ties between the two issues but we don't want to mix the issue of economic recovery in Lebanon, which is today the clear emergency, and the question of Iran," Le Maire added.