New public debt: 70 percent in lira

Medium term management policy unveiled

The Ministry of Finance has launched a medium term public debt management policy from 2014 to 2016.

“This is a plan that guarantees the management of public debt with the best possible way to reduce negative effects on the economy and public finance,” said Minister Ali Hassan Khalil.

“The policy aims to centralize the information and management of public debt without having several parties involved in public debt management, determine the available choices for its management, improve the quality and accuracy of information related to public debt, take financial decisions within a strategic and healthy context to increase confidence and transparency with investors,” said Alain Bifani, Director General at the Ministry of Finance.

“The policy’s purpose is to provide the financial needs of the government and maintain its commitments to pay its duties on time, with the least costs for the medium to long terms and an acceptable rate of risks,” said Rania Al Chaar from the Directorate of Public debt. The management of public debt has the target of developing the primary and secondary markets to face any difficulties that may limit the local financial capability, according to Al Chaar.

The policy will be based on increased borrowing in foreign currency until 2016, to cover mainly the duties of the principal of debt and interest rates in foreign currencies. This means that that the government should increase foreign currency borrowing that is equivalent to 30 percent, while the rest of the financial needs have to be covered in Lebanese Lira.

The policy also consists of extending the deadlines of payment dues for recent years, especially in lira. The Ministry of Finance said that this measure would help protect against the risks of any hike of interest rates in the future.

The debt management policy follows to the creation of a Higher Debt Management Committee, which will be responsible for rolling out a plan to manage it under a clear outlook in the short, mid, and long terms, depending on the developments of the financial and economic developments in Lebanon.

“This debt management policy is the second strategic plan set by the Ministry of Finance to manage the public debt, after it established the Directorate of Public Debt,” said Bifani.

The Ministry of Finance put a draft law to establish the Directorate of Public Debt in 2004. The related law was issued in 2008, but the executive decrees were delayed till 2011 and 2012, including the creation of the Higher Debt Management Committee. Minister Ali Hassan Khalil chaired three meetings of this committee and approved the midterm public debt management policy.