According to the balance sheet of Banque du Liban (BDL), the central bank’s total assets added 10.48% since year-start, to reach $148.64B by end of December 2020. The increase was mainly due to the 25% rise in gold prices since the start of the year to $1,896.48/ounce by the end of 2020. As a result the “gold” account (composing 11.66% of BDL’s total assets) increased by 24.29% to $17.32B. In addition, “Other assets” (grasping 27.39% of BDL’s total assets) rose by 63.08% year-to-date (YTD), to reach $40.71B. In fact, this account is still raising doubts about the accuracy of BDL’s financial position, as it might be used to disguise losses on loans to the government and other operations.
BDL’s foreign assets (grasping 11.66% of total assets) decreased by 35.37% YTD to stand at $24.09B in December 2020. In details, this account mainly includes Eurobonds held by BDL, loans to commercial banks and reserves that BDL possesses with foreign correspondents. In fact this account doesn’t reflect the real situation. In details, Eurobonds are estimated to be $5B, however those Eurobonds are currently trading on average at 15 cent per dollar, which raises questions about the real value of Eurobonds on BDL’s balance sheet.
On the liabilities front, financial sector deposits (72.73% of BDL’s total liabilities) recorded a downtick of 3.63% YTD to settle at $107.95B in December 2020 of which around more than two thirds are denominated in dollars. It’s worth mentioning that the available liquidity of BDL is estimated to be $17.5B and is used in subsidizing the essential goods.
Looking at Currency in Circulation outside of BDL (13.80% of BDL’s total liabilities) it increased from $7B end-December 2019 to $20.51B in December 2020.This uptrend in circulated currency has been ongoing since the beginning of the year, as it continues to reflect clients’ strong preference for cash amid the growing uncertainty and feeble trust in the economy. In addition, BDL’s circulars No.148 and 151 further supported and facilitated cash withdrawals, as the circulars allowed depositors with foreign currency accounts to withdraw their savings in Lebanese lira at rate of LBP/USD 3,900.
BDL Total, foreign assets and currency in circulation in December ($B)
Source: BDL, BlomInvest