Banque Du Liban recently launched its Annual Report for the year 2024 where it estimated the Lebanese economy to have contracted by 6.4% in 2024. BDL commented that the Lebanese economy faced a host of challenges for the fifth year in a row, noting that the recent Israeli war has inflicted massive losses on the economy, with physical damages estimated $6.8 billion and economic losses attaining $7.2 billion as per World Bank estimates, exceeding 50% of GDP. BDL, nevertheless, commented that the last quarter of the year 2024 witnessed some positive developments, with the inking of a ceasefire agreement coupled with some political breakthroughs and signs of renewed engagement in the reform process. BDL added that the balance of payments recorded a surplus of $6.44 billion in 2024 ($2.2 billion surplus in 2023) as BDL started including the change in gold reserves in the calculation of the change in net foreign assets as of the month of October, with the balance of trade deficit attaining $14.2 billion (2.3% lower than the $14.5 billion deficit recorded in 2023) on the back of some 3.6% contraction in imports to $16.9 billion which outweighed the 9.6% drop in exports to $2.7 billion. The annual report also uncovered that remittances from expatriates have reached $6.8 billion in 2024. On the monetary level, BDL commented that it adopted a new exchange rate of LBP 89,500/USD starting the month of January 2024, with the exchange rate remaining stable throughout the year, fluctuating slightly within a range of LBP 89,600 - LBP 89,700 against the US dollar, even amid heightened pressures during the last quarter. The Central Bank attributed the stability of the exchange rate to its strict monetary policy which pivoted around controlling money supply and curbing government financing. Foreign currency reserves at BDL increased by 8.7% in 2024 to $10.1 billion, while the value of gold reserves added 25.8% to ~$24.1 billion as global gold prices skyrocketed. BDL strived to achieve a delicate balance between maintaining the stability of the financial system by adopting a comprehensive macro prudential regulatory policy aimed at reducing systemic risks, and mitigating the effects of the crisis on production, monetary stability, and prices through conventional and unconventional monetary policy tools, particularly by supporting the exchange rate. The Central Bank also highlighted that it worked on ensuring the stability of the banking and financial sectors during this period of stagnation and high uncertainty, awaiting the launch of the reform and restructuring phase. Furthermore, the BDL commented that it focused in 2024 on improving payment and transfer systems, managing liquidity, reducing inflation rates, and contributing to public debt management. It added that the banking sector's resumption of its effective role hinges on finding comprehensive solutions namely the adoption of reform legislation, the reorganization of public finances, addressing the issue of deposits, reinstating confidence and restoring the flow of liquidity to banks. BDL unveiled the list of tools it utilized to execute its monetary policy as highlighted below:

-       Maintaining monetary stability: Controlling the level of money supply between LBP 52 billion and LBP 60 billion in cooperation with the Ministry of Finance, maintaining exchange rate stability and disbursing additional payments to people benefiting from circulars 158 and 166.

-       Relative Stability in Interest Rates: The interest rate on LBP loans and deposits increased by 164 and 303 basis points in 2024 on a respective basis, while that on USD loans added 165 basis points and the interest rate on USD deposits remained almost stable.

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-       Striving to enhance confidence in the national currency by controlling LBP money supply: LBP money supply increased by 12.9 percent in 2024 to LBP 65.56 trillion, compared to a 27 percent decrease in 2023.

-       Securing a safe and developed local payment system: BDL continued its mission to modernize, develop, and supervise payment systems and aligning them with best international standards. BDL also followed up on the issues of mobile banking, checque truncation, and digital currencies.

-       Managing excess liquidity, securing funding sources for the state & managing public debt: The Ministry of Finance has halted the issuance of treasury bills and BDL did not issue new Certificates of Deposits (LBP and USD) in 2024. As a result, the value of outstanding treasury bills in the system stood at LBP 27.37 trillion in 2024 while LBP-denominated CDs and term deposits at BDL reached LBP 34.07 trillion (compared to LBP 34.99 trillion in 2023) and LBP 15.50 trillion (down from LBP 51.49 trillion in 2023) on a respective basis. BDL also recorded rental revenues of LBP 15.00 billion in 2024 in addition to booking some $54.58 million and $0.36 million in dividend income from Middle East Airlines and the Arab Investment Company on a respective basis. It added that it collected some $36.39 million (in local dollars) from venture capital funds incepted under the umbrella of BDL circular 331.

The annual report also listed a set of circulars issued by BDL during the year 2024 such as basic circular 166 (gradual repayment of deposits constituted after October 2019 and adhering to strict eligibility criteria) and basic circular 167 (related to the translation of monetary and non-monetary assets and liabilities on the books of banks to LBP in accordance with IAS 21). In addition, BDL amended basic circular 154 related to the calculation of the 3% foreign liquidity threshold as well as to the 100% fresh deposit coverage threshold, and issued intermediate circulars 689 and 690 related to exempting banks from adhering to the 2.5% capital conservation buffer and allowing the inclusion of 75% of real estate revaluation gains acquired in settlement of bad debt in regulatory tier one capital.