Lebanon’s Financial Crisis: Declining Currency Reserves & Limited Intervention Options

2023-09-19 01:46:32

With our correspondent in Beirut, Paul Khalifeh

The bulletin of the Bank of Lebanon indicates that only 76 million dollars remain of the billion dollars allocated by the International Monetary Fund within the framework of special drawing rights in 2021. This mechanism allows the international financial institution to release funds outside any financial assistance program to allow countries in difficulty to finance imports of basic necessities, such as medicines or food.

The figures revealed by the Bank of Lebanon also show the continued decline in hard currency reserves, which fell by 84 million dollars in one month.

These reserves amount to $7.2 billion, mainly made up of deposit guarantees from commercial banks. But the successor of Riad Salame at the head of the Bank of Lebanon, Wassim Mansouri, has pledged not to spend this money.

All these figures show that the Central Bank’s margins of intervention to control the foreign exchange market and to finance state spending are increasingly limited.

The only good news is that Lebanon’s gold reserves are estimated at $18 billion. However, this gold cannot be sold without a law passed in Parliament, which is very unlikely.

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