Central Bank foreign assets
drop $2.3 billion in 2018

Reserve adequacy well above average

of similarly-rated countries

The value of foreign assets held by the Central Bank (BDL) dropped $2.3 billion last year to $39.7 billion. They fell a further $448 million this year, to $39.2 billion as of mid-February, according to BDL data.

The decline in foreign assets last year was mainly due to the redemption of three sovereign bonds denominated in foreign currencies totaling $2.23 billion, and to a wave of foreign currency conversions amid mounting uncertainties regarding the formation of a new Cabinet, according to Bank Audi’s ‘Lebanon Economic Report’ for the last quarter of 2018.

The fall in foreign assets resulted in a drop in the foreign assets-to-money supply coverage ratio to 77.1 percent at the end of 2018. This ratio, however, is still well above the reserve adequacy average in similarly rated countries, the report said.



Foreign assets consist of BDL’s holdings in foreign currencies that comprise securities. They don’t include gold reserves. Starting in November 2017, BDL began to consider its holdings of internationally traded Lebanese sovereign bonds issued in foreign currencies as part of its foreign assets.

Foreign assets recorded an unprecedented high of $45.3 billion in May 2018 thanks to swap operations that BDL carried out with local banks, according to the Bank Audi report.

The Central Bank began the swap transactions, dubbed financial engineering operations, in 2016. BDL’s aim was to bolster its foreign assets after they hit a bottom of $34.6 billion in May of that year following a downward spiral that began in mid-2015. The first operation helped boost BDL’s foreign assets to $40.1 billion in August 2016.