Qatar purchased $500 million Lebanese government bonds

Qatar’s move is probably aimed at increasing its traction in the Middle East and comes in the wake of Saudi Arabia, the United Arab Emirates, Bahrain and Egypt cutting diplomatic ties with it since June 2017 and have accused Doha of supporting terrorism. Although Qatar is tiny in size, the country is very wealthy.

In a development that marks a boost for Qatar’s depleted finances, a Qatari government official stated, Doha has purchased some Lebanese government bonds as part of its planned $500 million investment in the country’s struggling economy.

Despite its tiny size, wealthy Qatar stated it would be investing $500 million in Lebanese government U.S. dollar bonds in order to support Lebanon’s economy.

The move is significant since Lebanon has one of the world’s highest levels of public debt to GDP ratio; its economic growth is also stagnant.

Although Qatar has not disclosed the timing or the size of the bond purchases it has made so far, however, any large purchase will act as a boon to Beirut as it grapples with public debt of 150% of its gross domestic product (GDP).

“Qatar has always been committed to strengthening its ties with the brotherly Lebanese Republic. Hence it decided to invest $500 million in the Lebanese economy, including purchasing Lebanese government bonds,” said a government official. “Some of the bonds have been purchased. The rest of investments are due as planned with the Lebanese government”.

Last week, Moody’s had stated, Lebanon is at risk of a debt rescheduling on the back of slowing capital inflows and weak deposit growth despite austerity measures in its 2019 draft budget.

Following Qatar’s $500 million investment pledge in January 2018, regional rival Saudi Arabia had also made a similar commitment to support Lebanon “all the way” in order to safeguard its financial stability. However, Saudi Arabia has yet to announce a purchase of Lebanese government bonds.

Incidentally, Saudi Arabia, the United Arab Emirates, Bahrain and Egypt have cut diplomatic ties with Qatar since June 2017. They have accused Qatar of supporting terrorism, a charge which Doha has denied.

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