The Emir of Qatar’s first-ever visit to Lebanon took place on Sunday where he pledged to help the struggling nation.

Qatar has announced that it will support Lebanon by buying US$500 million worth of Lebanese government bonds.

According to Bloomberg, Lebanon’s struggling economy needs a cash injection to reassure bond holders over the possibility of debt restructuring.

Finance Minister Ali Hasan Khalil shook bond markets recently when he told a newspaper the country may restructure its debt as part of a plan to repair public finances due to slow economic growth. He later denied the plans and officials got together to reassure investors the country would honor its obligations.

Qatar’s gesture would “reinforce the Lebanese central bank’s foreign assets and the reserves adequacy ratio, in addition to the favorable effects it would have on the balance of payments,” said Marwan Barakat, chief economist at Bank Audi, Lebanon’s biggest lender.

The Emir of Qatar, Sheikh Tamim bin Hamad Al Thani’s first-ever visit to Lebanon on Sunday was to participate in the Arab economic summit snubbed by most other world leaders. The energy-rich nation has faced a boycott since June 2017 by Saudi Arabia, the United Arab Emirates, Egypt and Bahrain, who accuse it of supporting terrorism and forging close ties with Iran. Qatar denies the allegations.

Experts state that Qatar’s decision to buy Lebanese bonds will be watched closely by its rivals. Sergey Dergachev, senior portfolio manager at Union Investment Privatfonds GmbH in Frankfurt, said Lebanon had become a proxy in the fight between Qatar and Saudi Arabia.

According to Bloomberg, as the world’s biggest exporter of liquefied natural gas, Qatar often finds itself playing the role of benefactor, handing out cash and promises in a region rife with feuds and intense competition.

Last year, the Emir met President Recep Tayyip Erdogan at the height of Turkey’s financial crisis and pledged to invest US$15 billion in the country. In 2012, Qatar made a deposit at Egypt’s central bank.

Richard Segal, senior analyst at Manulife Asset Management in London, said Qatar’s plan will give investors some assurance that there will be a buyer of last resort for Lebanese Eurobonds.

“There may be a bilateral diplomatic agenda in the background, or the investment could relate to the very high yield on the Eurobonds,” he said.

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