Lebanon’s Balance of Payments in a monthly Deficit in October 2021

According to BDL’s latest monetary report, the BOP recorded a cumulative deficit of $1,736M by October 2021, compared to a deficit of $9,988.4M over the same period last year. Accordingly, Net foreign Assets (NFAs) of BDL fell by $3,842.2M, while the NFAs of commercial banks added $2,106.2M by October 2021.

On a monthly basis, the balance of payment recorded a deficit of $154.4M on October 2021.

For a meaningful analysis, we examine the NFAs of commercial banks. For the month of October, the increase in foreign liabilities can be attributed to the monthly increase in “Non-resident financial sector liabilities” by 1.66% to reach $5.02B by October 2021, while the decrease in foreign assets can be attributed to the monthly reduction in “Claims on non-resident customer” by 2.52% to reach $3.53 by October 2021. In addition, the NFA of BDL declined by $123M only, because it has largely stopped its subsidies on essential goods in late September 2021, which is a notable improvement compared to the previous months.

On a related note, BDL issued Circular 158 which provides binding instructions to banks to pay back gradually their customers’ foreign currency deposits. The circular applies to all accounts opened before 31/10/2019 and calculated based on the accounts as of 31/3/2021, on the condition that the accounts do not exceed those available at 31/10/2019. The accounts are also calculated after netting out all claims that the banks have against their customers. This circular will likely decrease gradually the foreign assets of the commercial banks; noting also that circular 154 had obliged banks to increase their capital by 20% by February 2021.

Balance of Payments (BoP) by October (in $M)

Lebanon’s Balance of Payments in a monthly Deficit in October 2021

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