According to the balance sheet of Banque du Liban (BDL), the central bank’s total assets added 5.58% compared to last year, to reach $150.53B by mid of February 2021. The increase was mainly due to the 20.1% rise in gold price compared to last year to reach $1,818.15/ounce mid of February 2021. As a result, the “gold” account (composing 11.14% of BDL’s total assets) increased by 15.08% to $16.76B. In addition, “Other assets” (grasping 28.98% of BDL’s total assets) rose by 67.03% year-on-year (YOY), to reach $43.62B. In fact, this account originally was formed in November 2015 by splitting the “other assets” into two variables, “Other assets” and “assets from exchange operations of financial instruments”. Noticing the latter remained constant when the “other assets” is still accelerating which had raised questions about the accuracy of BDL’s financial position.
BDL’s foreign assets (grasping 15.38% of total assets) decreased by 36.87% YOY to stand at $23.14B mid of February 2021. 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. For instance, Eurobonds are estimated to be $5B, however those Eurobonds are currently trading on average at 15 percent per dollar, which raises questions about the real value of Eurobonds on BDL’s balance sheet.
On the liabilities front, financial sector deposits (71.52% of BDL’s total liabilities) recorded a downtick of 3.99% YOY to settle at $107.66B mid of February 2021, of which more than two thirds are denominated in dollars.
Looking at Currency in Circulation outside of BDL (14.92% of BDL’s total liabilities) it increased from $8.32B mid-February 2020 to $22.4B mid-February 2021.This uptrend in circulated currency has been ongoing since the end of the previous year, as it continues to reflect clients’ strong preference for cash amid the growing uncertainty and feeble trust in the economy. In addition, BDL’s circulars 151 further supported and facilitated cash withdrawals at the favorable rate of 3,900 LBP per USD. However, critics have warned that continuing such measures will have a detrimental impact on the value of the Lebanese pound though the circular was issued to ease people’s access to their USD deposits amid the current extraordinary circumstances that the country is going through.
BDL Total, foreign assets and currency in circulation as mid of February ($B)
Source: Banque du Liban, BLOMINVEST bank