The recent data of the Banque du Liban showed the intensification of pressure on the remaining dollars within the financial system in Lebanon, after the balance of payments deficit rose from the beginning of the year, until last August, to about 3.1 billion dollars, compared to only 2.36 billion dollars during the exact same period of the year. Past. Thus, the balance of payments has continued until the eighth month of this year, recording the same severe rises in the value of its deficits, in a continuation of the path it started since the beginning of this year, as a result of the inflation of basic materials prices in global markets (see the cities). Noting that the balance of payments shortens the difference between the issued and incoming dollars to the Lebanese financial system, including both the accounts of banks and the Banque du Liban.
The platform and the assets of the Banque du Liban
This development was automatically reflected in the net foreign assets of the Banque du Liban, which reduces the difference between the bank’s commitments and assets in hard currency, which declined during the same period (i.e. the first eight months of the year) by about 3.5 billion dollars. As it became known, this continuous depletion of the assets of the Banque du Liban was linked to the value of the dollars being pumped through the exchange platform, to control its exchange rate, which is still considered a supported price compared to the parallel market price. Until last Friday, for example, an exchange rate was recording an average exchange rate of 29,800 pounds to the dollar, while the parallel market exchange rate today exceeds 39,600 pounds to the dollar (which means that the black market exchange rate is 1.32 times the exchange rate of the platform).
Thus, all these indicators confirm – once again – two facts that cannot be escaped: The Banque du Liban platform has turned into a source of draining the dollars of the financial system, instead of being a tool for free circulation of dollars. Then its exchange rate turned into a supported price, but with completely opaque trading mechanisms, instead of its exchange rate representing the actual and real exchange rate for market transactions in hard currency. These two facts automatically raise the question of the feasibility of continuing to finance the platform according to its current working mechanisms, at a time when this platform drained, within eight months, liquidity that exceeds the loan requested by Lebanon from the IMF, which is supposed to be disbursed within 46 months.
Dollars source exchange platform
In all cases, the data of the Banque du Liban at the same time shows that the trading volume of the exchange platform has exceeded – since the beginning of the year – the limits of nine billion dollars. And if we assume that about $3.5 billion – out of this value – was financed from the reserves of the Banque du Liban, as the numbers of net foreign assets show, it will be possible to conclude that the Banque du Liban and the banks needed to absorb $5.5 billion from the market directly to finance the value of the remaining trades.
Noting that the Central Bank is currently resorting to absorbing part of the dollars that are sold through the platform, either by buying them at the parallel market price from money changers, or by buying them from a company or company. Mother. T. And other transfer companies, while banks buy some fresh dollars from some associations that benefit from incoming transfers, and whose contracts with donors prevent them from operating on the black market. These dollars – in addition to the reserve dollars pumped by the Banque du Liban – are what feeds the platform’s trading, with the Banque du Liban bearing the cost of creating cash in lira to buy these dollars from the market, in light of the platform’s inability – due to its low exchange rate – to absorb parallel market trading.
Who benefits from cash clutter?
In any case, it should be noted here that the volume of dollars sold through the platform, i.e. the nine billion dollars, was supposed in normal cases to cover the entire demand of traders for dollars for import (if we take into account the difference between imports and exports). However, as is well known, the vast majority of import operations still take place through the purchase of dollars from the parallel market, while imported goods are priced at the parallel market exchange rate as well.
In other words, the platform squandered all these dollars, at a heavy cost by depleting reserves and creating cash to buy dollars from the market, without even being able to finance the import of basic commodities, which raises the question directly about the identity of the beneficiaries of the supported platform dollars, and how to prioritize selling dollars through Platform. Once again, it turns out that the platform exacerbated the crisis of the parts market, rather than treating it.
In conclusion, and in light of the expected intensification of the liquidity crisis in hard currency, which will soon result from the rise in international oil prices, the Banque du Liban is supposed to recalculate well, especially with regard to how to manage its monetary policy, and how to move to the unified exchange rate, even if according to stages that take into account The necessity of securing dollars at an exact price for importers of basic materials. As for what is happening today, it is nothing more than a described monetary chaos, which can only end in a catastrophe at the level of the value of the national currency.