According to BDL’s latest monetary report, the BOP recorded a cumulative deficit of $10.2B by November 2020, compared to a deficit of $5.85B over the same period last year. Accordingly, Net foreign Assets (NFAs) of BDL fell by $13.08B. Meanwhile the NFAs of commercial banks added $2.88B over the first eleven months of the year.
On a monthly basis, the BOP deficit stood at $214.4M, as NFAs of BDL fell by $629.9M, and that of Commercial banks rose by $415.5M.
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 November, the decline in FLs can be largely attributed to the reduction in the “Non-resident customer deposits” and “Non-resident Financial sector Liabilities” by $191.6M and $99.6M, respectively. Further, on the Foreign asset side, “Claims on non-resident customers” dropped by $58.37M and “Claims on Non-resident Financial sector” rose by $219.4M, respectively. Further, “Non-resident securities portfolio” and “Other Foreign asset” increased by $5.5M and $25.6M, respectively.
It is worth noting that the drop in BDL’s NFAs on a monthly basis mostly follows 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 less amenities to finance trade of basic commodities. To reduce the depletion in BDL’s foreign assets, there is an urge to remove subsidies; in this case, policymakers in Lebanon have to allocate suitable social solution to support the families that are facing challenging living standards. That is in addition to resuming access to international capital markets through a reform program with the IMF.
Balance of Payments (BoP) by November (in $M)