General FAQ's
- What are the respective proportions of the gross domestic debt (debt held in local currency) and foreign debt (debt held in foreign currencies also known as the public external debt) with respect to gross public debt?
By the end of June 2004, gross domestic debt represented 53 percent of gross public debt and foreign debt represented 47 percent of gross public debt.
- Who are the debt holders and how much of the gross public debt do they respectively hold?
Regular statistics are published on public debt holders. A detailed breakdown is published on a quarterly basis and can be found in the last Ministry of Finance Quarterly Report, QII 2004 at p.12. A more succinct breakdown is published on a monthly basis and can be found in the debt section of the monthly statistical tables.
- How did the gross public debt and the net public debt evolve with respect to GDP in the last five years?
The gross public debt and net public debt to GDP ratios for 1999-2003 are published in the "Lebanon Country Profile 2004" at page 3.
- What is the gross market debt indicator and why do we use it?
The gross market debt is defined as the gross public debt less the portfolios of the Central Bank, public institutions, bilateral and multilateral loans, and debt issued to the Paris II lending countries. The higher the proportion of the gross market debt, the higher will your debt roll-over risk be.
- What is the composition of the gross domestic debt (or what are the types of instruments that the gross domestic debt consists of)?
The composition of gross domestic debt as of end 2003 can be found in the "Lebanon Country Profile" at page 34.
- What is the composition of the public external debt (or what are the types of instruments)?
The composition of public external debt as of end 2003 can be found in the "Lebanon Country Profile" at page 34.
- Where can we find details on outstanding Eurobonds?
Details on outstanding Eurobonds (year of issue, maturity, original principal amount, outstanding principal amount and coupon rate) can be found in the "Lebanon Country Profile" at page 35.
- Where can we find details on outstanding LL T-Bills?
Details on outstanding LL T-Bills (maturity, outstanding principal amount and coupon payments) can be found in the "Public Debt Report" at page 14-15.
- Where can we find details on outstanding c-loans?
Details on outstanding c-loans (maturity, outstanding principal amount and interest payments) can be found in the "Public Debt Report" at page 17.
- Who are the creditors of the public external debt?
Details on the creditors of the public external debt can be found in the "Lebanese Country Profile" at page 36.
- What is the currency structure of the public external debt?
A detailed breakdown of the types of currency the Lebanese public external debt is consisted of can be found in the "Lebanon Country Profile" at page 37.
- What is the overall weighted average cost of the outstanding public debt?
Details on the overall weighted average cost of the outstanding public debt can be found in the Ministry of Finance Quarterly Report, QI 2004 at page 11.
- What is the performance of Lebanese secondary market prices?
A detailed table updated as of August 5th, 2004 can be found on Lebanese secondary market prices in the Ministry of Finance Quarterly Report, QII 2004 at page 14.
- What are the countries which participated in Paris II and what were their respective contributions?
Eight donor countries participated in Paris II, namely Malaysia (USD 300 million), Sultanate of Oman (USD 50 million), United Arab Emirates (USD 300 million), Kuwait (USD 200 million), France (USD 540 million), Kingdom of Saudi Arabia (USD 700 million), Qatar (USD 200 million). For more information, please refer to One-Year Progress after Paris II Report at pages 8 and 9.
- What is the evolution trend on the interest rates after Paris II?
Please refer to One-Year Progress after Paris II Report at pages 16 and 17 for the tables and graphs showing the evolution trend. A more recent update can also be found in the Ministry of Finance Quarterly Report, QII 2004 at page 14.
- What is the use of the Paris II lender country contributions?
The inflows of Paris II were used for the retirement of LL Treasury Bills, of USD Eurobonds, of c- loans, and for the retirement of Eurobonds denominated in Euro. For more information, please refer to One-Year Progress After Paris II Report, page 11.
- What are the institutions involved in debt management?
First, the Ministry of Finance which
- (a) monitors loan servicing,
- (b) processes payments of external debt,
- (c) instructs the Central Bank (BDL) to execute payments to creditors, and
- (d) monitors the issuance and maturity of domestic Treasury bills managed by the Central Bank.
Second, the Council for Development and Reconstruction (CDR) which
- (a) negotiates and contracts all public and publicly guaranteed foreign loans, and
- (b) assesses different project financing schemes.
The Central Bank which
- (a) executes all payments to creditors based on instructions given by the Ministry of Finance, and
- (b) manages the issuance and servicing of domestic Treasury bills on behalf of the Ministry of Finance.
- Why is there need for new public debt management?
New debt management is motivated by four main factors:
- (a) a high net debt ratio,
- (b) a high debt service ratio,
- (c) a short maturity on the local debt, and
- (d) a narrow holder base.
- What is the objective of the new debt management?
The objective is to have an Active Debt Management Strategy in order to
- (a) implement debt re-profiling,
- (b) improve the risk profile,
- (c) play a proactive role in the market, and
- (d) strengthen the institutional set-up.
- What are the goals of an Active Public Debt Management?
Four goals can be distinguished as follows:
- (a) reducing the cost of debt servicing and securing the government's financial needs,
- (b) reducing the risks of public debt concentration, and lengthening its maturity profile, reducing interest rates and refinancing risks,
- (c) increasing the coordination between the financial and the monetary authorities and
- (d) strengthening administrative capacity building and improving the internal operations management concerning the public debt management.
- How to develop the local debt market?
The following five measures are necessary to develop the local debt market:
- (a) streamlining the issuing strategy and creating benchmarks,
- (b) fostering the development of the secondary market,
- (c) improving and modernizing market infrastructure,
- (d) developing instruments to enhance liquidity, and
- (e) adjusting the regulatory framework.
- How to develop the foreign borrowing strategy?
A development of the foreign borrowing strategy can be achieved through the following measures:
- (a) ensuring better use of official bilateral and multilateral borrowing,
- (b) updating the borrowing strategy on the Euro-market,
- (c) extending the maturity profile of the debt and building a yield curve, and
- (d) spreading government liabilities into different currencies and diversifying the investor base in the Eurobond market.
- What does the exchange transaction operation or swap operation stands for?
The swap operation consists in exchanging actual debt maturing in a specific period of time (usually in a short or medium term) against other debt (new treasury bills) maturing later.
- What is the objective of this operation?
The swap objective is to re-spread maturities on new terms, to increase liquidity in benchmark issues and in certain cases to postpone the payment of specific debt maturities.
- What was the SWAP (of bonds due 2005) effect on government finances?
The SWAP operation resulted in smoother near term public debt maturity structure, and allowed the government to lengthen the profile of the public debt. Moreover, financing needs for 2005 were reduced by the amount of the exchange transaction equal to USD 1,186,532,000 and the new issued cash subscriptions equal to USD 353,468,000 provided additional support to meet financing needs of the government.
- What was the participation rate and how does it compare with participation rates for transactions of comparable sovereigns?
The 55 percent rate registered during the exchange transaction represented the highest level of participation among similar exchange transactions of comparable sovereigns whose rates ranged between 12 percent and 44 percent. For more details, you can consult the "Brief Note on Exchange Transactions", page 3.
- What were the reasons behind the success of the SWAP operation?
The success of the transaction and high participation rate of investors reflects Lebanon's dedicated investor base and ample liquidity resulting from increased deposits. |
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