According to the balance sheet of Banque du Liban (BDL), the central bank’s total assets added 3.43% compared to last year, to reach $159.75B by end of August 2021. The increase was mainly due to the 35.12% year-on-year (YOY) rise in other assets, grasping 35.41% of BDL’s total assets and reaching $55.17B by end of July 2021. However, the gold account, composing 10.47% of BDL’s total assets decreased by 7.67% yearly to reach $16.73B by the same period.
BDL’s foreign assets (grasping 12.25% of total assets) decreased by 31.24% YOY to stand at $19.57B by end of August 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. That is why a better estimate of liquid and ready foreign reserves excludes them, which implies that foreign currency reserves amount for $14.5B only.
On the liabilities front, financial sector deposits (67.26% of BDL’s total liabilities) recorded a downtick of 1.64% YOY to settle at $107.44B by end of August 2021, of which more than two thirds are denominated in dollars.
Looking at Currency in Circulation outside of BDL (17.02% of BDL’s total liabilities) it increased by 83.31% jumping from $14.83B by end of August 2020 to $27.18B end of August 2021.
All things considered today, the fastest action that could improve the situation is a direct injection of foreign currency into the financial system. In this context, Lebanon is waiting to make a deal with most likely Qatar on trading the allocated special drawing rights (SDR) amounting about $862.2M against cash which will temporarily boost the Central Bank’s foreign currency reserves.
BDL Total, Foreign assets and currency in circulation end of August ($B)
Source: Banque Du Liban, BLOMINVEST