Lebanon’s Balance of Payments Deficit at $7.50B by August 2020

According to BDL’s latest monetary report, the BOP recorded a cumulative deficit of $7.50B by August 2020, compared to a deficit of $5.89B by August last year. Accordingly, Net foreign Assets (NFAs) of BDL fell by $9.43B. Meanwhile the NFAs of commercial banks added $1.93B over the same period.

On a monthly basis, the BOP deficit stood at $1.97B, as NFAs of BDL and that of Commercial banks fell respectively by $2.22B and by $253.2M.

For a meaningful analysis, we examine the NFAs of commercial banks which are in fact the difference between banks’ Foreign Assets (FA) and Foreign Liabilities (FL). For the month of August, the decline in FLs can be largely attributed to the reduction in the Non-resident customer deposits and Non-resident Financial sector liabilities by $222.35M and $106.28M respectively. Meanwhile, the FAs decreased by $108.54M owing mostly to the respective declines of $139.91M and $18.73M in the Loans to Non-resident customers and other Non-resident securities portfolio. Moreover, claims on Non-resident financial sector, the third component affecting Foreign assets, dropped by $39.66M.

It is worth noting that the decline in BDL’s NFAs on a monthly basis is mostly attributed to the continued subsidization of essential imports (including basic food, medicines and fuel) in addition to paying back loans and/or deposits in foreign currency, leaving the central bank with limited facility to finance trade of basic commodities. In details, BDL foreign assets dropped monthly by $2.22B in August 2020.

Balance of Payments (BoP) by August (in $M)

Lebanon’s Balance of Payments Deficit at $7.50B by August 2020

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