Battling debt

The Lebanese government’s successful efforts to put on hold the almost weekly auction of Lebanese Pound Treasury Bills some nine months ago is a positive development many. Local and international economists attributed the move to the substantial increase in liquidity levels pursuant to the Paris II donor conference held during the fall of 2002. The $4 billion drawn during the Paris II conference, coupled with the $4 billion interest-free loan provided to the government by Lebanese banks, have resulted in a surge in liquidity levels, which allowed the government to stop borrowing locally through T-Bills. As the year draws to a close, however, the treasury is opening up its auction doors once again, borrowing domestically through the issuance of new T-Bills, with maturities ranging from one year to three years. The motives behind such a move have been debated often among leading bankers and economists, in the light of the