BDL Appears Running Out of Foreign Reserves Reaching an Alarming $20.55B by End of June 2021

According to the balance sheet of Banque du Liban (BDL), the central bank’s total assets added 3.12% compared to last year, to reach $156.74B by end of June 2021. The increase was mainly due to the 43.76% year-on-year (YOY) rise in other assets, grasping 34.02% of BDL’s total assets and reaching $53.32B by end of June 2021. However, the gold account, composing 10.34% of BDL’s total assets decreased by 0.72% yearly to reach $16.21B by the same period.

BDL’s foreign assets (grasping 13.11% of total assets) decreased by 37.64% YOY to stand at $20.55B by end of June 2021. In details, this account mainly includes Eurobonds held by BDL, and reserves that BDL possesses with foreign correspondents and other short-term instruments. In fact, this account doesn’t totally reflect the real situation. For instance, Eurobonds are estimated to be $5.03B; however those Eurobonds are currently trading on average at 15 percent per dollar, which raises questions about the value of Eurobonds on BDL’s balance sheet.

On the liabilities front, financial sector deposits (68.29% of BDL’s total liabilities) recorded a downtick of 4.61% YOY to settle at $107.04B by end of June 2021, of which more than two thirds are denominated in dollars.

Looking at Currency in Circulation outside of BDL (17.07% of BDL’s total liabilities) it increased by 109.15% jumping from $12.79B by end of June 2020 to $26.75B at end of June 2021.

On the whole, the situation has becoming extremely critical in Lebanon. Yet the fastest thing that could make Lebanon out of his current crisis is a fast injection of dollars into his financial system. In this context, a statement by the Finance Ministry said that Lebanon, as a member of the IMF, could be allocated in next August special drawing rights (SDR) amounting $900M which will boost the Central Bank’s foreign currency reserves, though temporarily.

BDL Total, Foreign assets and currency in circulation as end of June ($B)

BDL Appears Running Out of Foreign Reserves Reaching an Alarming $20.55B by End of June 2021


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