Discrepancy in BDL Reports Regarding Foreign Assets: A Closer Look

In Lebanon, people are closely monitoring the latest updates from the Central Bank of Lebanon (BDL), particularly in regards to its foreign assets. These assets play a crucial role in understanding the country’s economic stability and financial situation. Below are tables displaying the foreign assets reported by BDL for the periods ending 31-08-2023 and 30-09-2023.

Table 1: Foreign liquid assets as of 31-08-2023

Table 2: Foreign liquid assets as of 30-09-2023

Table 3: Foreign liquid and illiquid Assets as per BDL Interim financial statements

The economic landscape of Lebanon has been under scrutiny, and one topic that has drawn attention is the discrepancy between the monthly reports from the Central Bank of Lebanon (BDL) and the BDL interim financial statements, specifically concerning foreign assets. This economic review delves into this discrepancy, aiming to shed light on the underlying factors and possible explanations.

As of the monthly report from BDL for 31-8-2023, foreign liquid assets are reported at $8,498 million. However, the BDL interim financial statements for the same date indicate foreign assets of $13,879 million. When we extract the Eurobond holding from the interim financial statement (as BDL holds $5,200 million in Lebanese Eurobonds), the difference between foreign assets and Eurobond holding is $8,679 million.

Similarly, the monthly report from BDL for 30-9-2023 states foreign liquid assets at $8,414 million, while the BDL interim financial statements list foreign assets at $13,966 million. After deducting the Eurobond holding of $5,200 million, the remaining foreign assets amount to $8,766 million.

The explanation for this discrepancy could lie in foreign illiquid assets, which are not detailed in the monthly reports but are evidently a significant part of BDL’s balance sheet. Foreign illiquid assets could then be the key contributing factor to the gap between the liquid foreign assets reported monthly and the comprehensive foreign assets disclosed in the interim financial statements.

Foreign illiquid assets refer to those holdings that are not readily convertible to cash, such as investments in real estate, or other assets with long-term value. These assets might have different valuations or maturity periods, which can impact their classification in the balance sheet. The specific composition and valuation of these foreign illiquid assets are essential pieces of information that can help reconcile the variations in reporting.

To gain a more comprehensive understanding of Lebanon’s economic situation, further clarification and transparency on the composition and valuation of these illiquid assets are crucial. This review highlights the need for greater transparency and information sharing to bridge the gap and provide a clearer economic picture, though no doubt the steps taken by BDL so far to enhance transparency through the publication of the monthly reports are highly commendable.