Beirut: Lebanon's prime minister says the government will suspend payment of $1.2 billion in loans, marking the crisis-hit country's first default on its sovereign debt amid ongoing popular unrest.

Hassan Diab made the announcement in a televised address to the Lebanese people, saying the country would seek to restructure its massive debt. The $1.2 billion Eurobond matures on Monday.

The default marks a new chapter in the crisis and could have severe repercussions on the tiny country, risking legal action by lenders that could further aggravate and push Lebanon's economy toward financial collapse. The currency has already lost up to 60 per cent of its value on the dollar on the black market, and banks have imposed crippling capital controls on cash withdrawals and transfers.

Lebanese military clash with protesters in February. Credit:Bloomberg

Diab said Lebanon's debt had reached $90 billion or 170 per cent of GDP, making it one of the highest in the world. The total debt and interest Lebanon had to pay back in 2020 was at $4.6 billion