Beirut: Lebanon’s lead negotiator for Eurobond restructuring and a key member of the government’s negotiating team with the International Monetary Fund has resigned.
Talal F. Salman, a Harvard graduate who has been serving as an economic adviser to the Finance Ministry for the past six years, submitted his resignation - effective Monday - from his position at the United Nations Development Program and the ministry, according to a person familiar with the matter.
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He’s the third ministry official to quit over Lebanon’s response to its financial crises.
Struggling to stay afloat
Faced with financial losses triple the size of its economy, Lebanon is struggling to stay afloat with dwindling reserves and soaring inflation that reached an annual 112% in June, coupled with a currency crisis. Talks with the IMF over a $10 billion bailout have been on hold for months as the government tries to consolidate views with other stakeholders on financial losses.
The resignation delivers another blow to the team that was negotiating with the IMF along with the government’s advisers, Lazard Ltd. and Cleary Gottlieb.
Salman played a pivotal role in Lebanon’s decision to default on $30 billion of Eurobonds in March to save what was left of its foreign currency reserves. He was also a principal member in the talks with the IMF as well as negotiations with the central bank and local lenders on consolidating opposing views, and the point of contact for foreign bondholders.
Alain Bifani, outgoing director general of the ministry and a member of the team, as well as adviser Henri Chaoul, have resigned in protest of the government’s dealing with the financial crisis.
Bifani has blamed bankers and special interest groups for obstructing the execution of the government plan that sought to restructure the debt, mostly owned by lenders and the central bank.
The proposals, which came under heavy scrutiny from lenders and parliamentarians, would have wiped out the banks’ capital and restructured the balance of the central bank including its liabilities, estimated at $80 billion.
Salman, 39, was a key member of a committee that included advisers, the central bank and bankers aimed at exploring options to distribute the losses, estimated to be around 241 trillion pounds, or $69 billion based on a proposed exchange rate of 3,500 pound per dollar. Banks want the government to sell assets and repay what it owes to the central bank, allowing the latter to meet its liabilities to the lenders.
Reforms essential for aid
Lebanon’s president set Aug. 31 as the first day of parliamentary consultations to name a new prime minister, weeks after the government resigned in the face of mounting anger over a massive blast that killed 170 in the capital.
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French President Emmanuel Macron is set to return to Beirut next week to follow up on the formation of a new government. Macron was the first foreign official to visit Lebanon after the devastating blast and asked politicians to form a new cabinet to immediately implement reforms and unlock billions in donor money.
Officials have repeatedly failed to implement change as demanded by the IMF as well as the international community to put an end to corruption and mismanagement of public funds.