Lebanon’s balance of payment surplus at $5.1 billion by August 2024

BEIRUT – Lebanon’s balance of payment (BOP) for August 2024 — the amount of money flowing into the country versus the amount flowing out — recorded a surplus of around $5.1 billion compared to a surplus of $1.07 billion in August 2023, according to BlomInvest’s latest analysis. This represents an increase of 377 percent between the two months.

The analysis shows that the Net Foreign Assets (NFA) — or the sum of foreign assets, like gold and foreign currencies, held by a monetary authority minus foreign liabilities, like foreign deposits at the central bank — of the Banque du Liban (BDL), rose by $5.3 billion while the NFAs of commercial banks went down by $218.9 million by August 2024.

Specifically in August 2024, BDL NFAs increased by $1.2 billion while those of commercial banks rose by $54.4 million, creating a $1.2 billion surplus.

“There’s been a change in the way BOP measurement is made,” explained the research department at BlomInvest. “Gold was previously not included under the BDL’s foreign assets,” but this changed in January 2024, “based on the BDL Central Council Decision Number 37/20/24, dated 19/09/2024,” the report noted.

The department stressed that these changes were “strictly administrative, and simply a matter of compliance to abide by IMF recommendations and align with international norms.”

“The price of gold increased significantly this past year,” the report noted, which reflected a considerable increase in foreign assets, and subsequently led to a greater BOP surplus in 2024.

They stress that the increase in the BOP surplus value only reflects a change in the monetary value of the BDL’s gold, not in its volume. Had the old measurement been adopted, the surplus would have likely been smaller, they added.

In August 2023, an audit conducted by ALS Inspection, on behalf of one of the big four audit firms, KPMG, had found that the total gold reserves amounted to 286 tons, equivalent to $9.22 million troy ounces (1 troy ounce = 31.1 grams).

“Since the Lebanese economy was fairly slow in 2024 up until August because of the war between Israel and Hezbollah, the country was also likely importing less — due to airport and flight disruptions — which means a smaller trade deficit which in turn helped boost the surplus in the BOP,” the department noted.

“Though the numbers are not officially released for October and November, it won’t be surprising if the BOP records another larger surplus,” they said.

They estimate that the war — which has come to an end after a cease-fire deal went into effect on Nov. 27 — is likely to have impacted the BOP “positively,” due to more money flowing into the country through increased remittances and international aid to the displaced and non-governmental organizations (NGOs).

Lebanon’s yearly BOP deficit had dropped by 75 percent in 2023 down to $643 million from $2.64 billion in 2022, according to the latest numbers from May 2024. While a step in the right direction, the department had said Lebanon was “still far from having a balanced BOP.”

The BlomInvest report also included that the country needed to lower “current account deficits to be able to service and retire its foreign debt.”