(Bloomberg) -- Lebanon’s central bank has bought 3 trillion pounds ($2 billion) of Treasury bills at 1% and is expected to purchase half as much at the same rate to reduce the government’s rising debt costs, a person with knowledge of the matter said.

The deal helps offset higher interest rates incurred by the Finance Ministry, which last month sold $3 billion Eurobonds to the central bank at as much as 12%, the person said on condition of anonymity.

Lebanon’s worsening economic crisis has effectively shut the country out of financial markets, prompting policy makers to look for different ways to ease one of the world’s biggest debt burdens.

The country has been without a functioning government since Prime Minister Saad Hariri resigned in late October in the face of mass protests against corruption and inequality.

The turmoil has forced the government to delay plans to tap bond markets for $3 billion to repay a central bank loan. The central bank also used its foreign reserves to repay maturing bonds this year on behalf of the government, including last month’s $1.5 billion Eurobond.

Lebanon Turns to IMF as Fitch Sounds Alarm on Default

President Michel Aoun on Monday postponed for the second time this month talks to name a new premier. Local media reports have indicated Hariri will be reappointed to form a new cabinet. Discussions are now set for Dec. 19.

A main Christian party allied with Aoun has refused to take part any administration headed by Hariri, who’s insisting on a government of experts to address the economic crisis. Hezbollah, an Iran-backed group also allied with Aoun, has demanded it have political representation in the new government.

The crisis has battered the economy and led to the emergence of a black market in dollars. Banks have refused to dispense the U.S. currency, leading to trade disruptions in a country almost entirely reliant on imports.

The parallel exchange rate is about 2,000 pounds per dollar, much higher than the 1,507.5 per dollar fixed rate in place since 1997.

Last week, the United Nations special coordinator for Lebanon, Jan Kubis said the international community would help Lebanon out of its crisis if it formed a government supported by the people that was committed to sweeping reforms.

(Updates with background, talks delayed)

To contact the reporter on this story: Dana Khraiche in Beirut at dkhraiche@bloomberg.net

To contact the editors responsible for this story: Alaa Shahine at asalha@bloomberg.net, Michael Gunn

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