The Lebanese Central Bank’s balance sheet conveys a rare $239.34 million expansion in BDL’s foreign assets portfolio during the second half of October 2022 to $15.28 billion, up from $15.04 billion a fortnight earlier. When factoring out the portfolio of Lebanese Eurobonds held by the Central Bank amounting to $5.03 billion, the latter’s foreign currency reserves would settle at $10.25 billion by end of October. Conversely, the value of gold reserves at BDL fell by 1.15% ($175.59 million) in the second half of October to $15.14 billion as gold prices dropped amid expectations of a 75 basis points rate hike by the US Federal Reserve in the coming week.

On an annual basis, BDL’s foreign assets came in 18.17% ($3.39 billion) lower than the $18.67 billion reading reported at end of October 2021. Similarly, the value of gold reserves settled 8.42% ($1.39 billion) lower when benchmarked to the $16.53 billion figure recorded in the same period in 2021. It is worth noting that BDL’s total reserves (foreign currency and gold) cover some 163 months of debt service and constitute around 24.96% and 29.17% of Lebanon’s gross and net public debt on a respective basis.

In a related note, BDL’s balance sheet widened by 1.91% ($3.53 billion) on a biweekly basis to $188.29 billion mainly on the back of the $3.80 billion (3.78%) increase in other assets (representing capitalized open market operations and seigniorage) to $104.43 billion which was met by a 7.53% expansion in currency in circulation outside BDL to $49.79 billion. This increase can be attributed to the printing of some LBP 5.25 trillion in LBP banknotes used to purchase USD banknotes at the black market rate to replenish part of FX reserves. The increase in other assets was coupled by a 1.59% expansion in the value of foreign assets to $15.28 billion outweighing the 2.21% contraction in loans to the local financial sector to $12.28 billion, the 0.14% decrease in the value of the securities portfolio to $40.86 billion and the 1.15% drop in the value of gold reserves to $15.14 billion.

The share of BDL’s foreign assets of the latter’s total assets decreased to 8.11% as at end of October 2022, compared to 8.14% a fortnight earlier, with that of gold reserves concurrently dropping to 8.04%, down from 8.29% two weeks earlier. On the other hand, the share of other assets rose to 55.46% of BDL’s total balance sheet by end of October 2022, up from 54.46% two weeks earlier.