2023-08-17 12:46:28
The interim governor of the Banque du Liban (BDL), Wassim Mansouri, published in a press release on Thursday the details of the currency reserves held by the institution when he took office on July 31, as well as the immediate commitments due. on this same date.
The former First Vice-Governor recently replaced Governor Riad Salamé ex officio, for lack of a successor duly appointed by the executive in a country in crisis for 4 years, without President of the Republic since last November and which is led by a government resigned since the legislative elections of May 2022.
Among the main lessons to be learned from the published figures is the fact that the Lebanese ruling class squandered 90% of the $1.135 billion from special drawing rights (SDRs) released by the International Monetary Fund in September 2021, i.e. at the time of the formation of Nagib Mikati’s government. This is the first time that the BDL officially communicates this data.
A financial instrument used between the international organization and its members, the SDRs have no connection with the financial aid that the IMF plans to release for Lebanon as part of an assistance program committing the country to launch important fundamental reforms.
The acting governor did not provide details on how the SDRs were spent. It should be noted that the remaining $125 million of SDRs are recorded in the commitments column of the BDL’s foreign exchange reserves. The latter considers that they do not fall into the category of amounts that it can freely use to finance its interventions on the market and that they can only be disbursed at the express request of the State.
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Currency reserves
In his statement, the acting governor of the BDL also gave a detailed picture of what the institution still has in terms of foreign exchange reserves and what it had to pay. It is more of an account position than a balance sheet, as it does not include the other assets and liabilities of the BDL, including the tens of billions of dollars of certificates deposit and deposits demanded by the country’s banks, among others.
On the reserves side, the BDL thus had a total of 8.573 billion dollars as of July 31, which breaks down into:
• $1.53 billion in available liquidity (cash on hand);
• $3.114 billion in current accounts;
• 3.711 billion in term deposits;
• And 218 million equivalent to the transferable value of international financial securities (investments made by the BDL in foreign bonds and securities).
Note that the total noted as of July 31 differs from that of 9.04 billion dollars communicated at the beginning of August by the institution, which reflected a drop of more than 600 million dollars in two weeks. The BDL did not explain the reasons for this difference in its press release, contenting itself with indicating that the new figures had been verified by its services as well as the other departments concerned.
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Real value of eurobonds
Added to this amount is that of the portfolio of eurobonds (Lebanese government bonds in dollars), i.e. “5.212 billion dollars” which are only worth “386 million” at their real market value, according to calculations by the BDL.
Lebanon defaulted on the repayment of these securities in March 2020 and has still not seriously negotiated with its creditors to restructure its debt, which has caused the value of these same securities to fall in the secondary market, where they are traded. currently between 7.5 and 8 cents, according to the Bank Audi research department we contacted. “Prices, which were between 6 and 7 cents, have appreciated slightly over the past two weeks,” said department director Marwan Barakat. According to our calculations, the BDL relied on Eurobonds reaching 7.5% of their nominal value to obtain the indicated market value.
Engagements en dollars
The press release signed by Wassim Mansouri further specifies that the amount of BDL’s outstanding commitments as of July 31 totaled $1.27 billion, including:
• The 125 million dollars from DTS;
• 275 million dollars provisioning accounts in “fresh” dollars opened for the benefit of the public sector;
• 8 million provisioning accounts in “fee” dollars opened for the benefit of the “banking sector” and which are used to clear current banking transactions in foreign currency;
• 96 million providing for letters of credit assumed by the BDL;
• 660 million linked to long-term loans and bearing interest contracted with “Arab parties”;
• And finally 106 million dollars provisioning deposits made by “Arab” entities, institutions and States in particular. On social networks, some accounts have highlighted the fact that this amount has decreased significantly, reflecting the disengagement of Arab countries in Lebanon.
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gold reserves
The difference between assets and outstanding liabilities totals $7.3 billion of usable reserves. The Acting Governor further reiterated the institution’s commitment not to spend available reserves on anything other than honoring listed commitments and reimbursing deposits blocked by illegal banking restrictions in place since late 2019, through the mechanism of circular n° 158 of the BDL.
Established on June 8, 2021, this mechanism allows selected beneficiaries each month, according to specific terms and conditions, to withdraw $300 or $400 “fees” from these accounts to which access has been restricted.
Finally, the BDL did not communicate the exact amount of gold reserves on this date (18 billion according to the latest balance sheet of the BDL relayed by the Lebanon This Week of Byblos Bank).
Lebanon has the second largest stock of Arab countries at 286 tons, equivalent to 9.22 million troy ounces (1 ounce = 31.1 grams), of which regarding 40% is stored in the United States. Last November, Riad Salamé announced that the audit of the country’s gold reserves had been carried out “successfully” by an international company chosen and commissioned by a delegated consultant, without further details.
The interim governor of the Banque du Liban (BDL), Wassim Mansouri, published in a press release on Thursday the details of the currency reserves held by the institution when he took office on July 31, as well as the immediate commitments due. on this same date. The former first vice-governor recently replaced governor Riad Salamé,…
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