Balance of Payments registered a $1.01 billion deficit by November 2017

Lebanon’s Balance of Payments (BoP) registered a $1.01 billion deficit by November 2017 compared to a $327.7 million surplus by November 2016. By November 2017, the Central Bank of Lebanon’s Net Foreign Assets (NFAs) grew by $1.50 billion while the commercial banks’ NFAs declined by $2.51 billion.

In the month of November alone, the balance of payments registered a surplus of $68.2 million compared to a deficit of $887.8 million registered in October 2017.

Prime Minister Hariri’s surprise-resignation announced from Saudi Arabia sparked manageable but sizeable capital flight and demand on the dollar. 

In details, in November 2017, the commercial banks’ NFAs rose by $1.06 billion and the Central Bank’s NFAs declined by $991 million.

In fact, the commercial banks’ NFAs rose simply because foreign liabilities declined more than foreign assets increased. In detail, commercial banks sold some of their Eurobonds’ holding which fell by a monthly 2.51% ($367.54M) to reach $14.3B in November in order to replenish their liquidity in USD and answer the high demand for the dollar while  their foreign liabilities dropped given the fact that the non-resident private sector deposits  slid by $1.13 billion between October and November.

In sum, we can conclude that the capital outflows in November 2017 amounted to $2.59B. In fact, after the Hariri shock non-resident private sector deposits declined by $1.13B and $1.46B of resident private sector deposits fled the country. 

Balance of Payments (BoP) (in Millions of $)

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Source: Banque du Liban

 

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