Chained to the debt

The story of how Lebanese commercial banks effectively finance the country through buying government debt has been told so many times that it is  cliché — but even after all these years, it rings no less true. As of the end of March 2012, the Association of Banks in Lebanon reported that the sovereign had rung up a tab of some $29 billion at the country’s banks, having issued them some $13 billion in Eurobonds (70 percent of the government’s Eurobonds portfolio) and $16 billion in Treasury bills (49 percent of the government’s Treasury bills portfolio). While this figure represents only 20 percent of the banking sector’s total assets, it fails to take into account deposits placed with the central bank, which stood at $50 billion as of the end of March, taking commercial banks’ overall exposure closer to 55 percent of assets. All this is relative to total Lebanese