When the Banque du Liban launched the “Exchange” platform in May 2021, it aimed to curb the price of the Beirut dollar, which at that time was multiple to five prices and an average of 20,000 pounds, in preparation for unifying the exchange rate at the request of the International Monetary Fund. However, after nearly two years, the “platform” failed to achieve this goal. Instead of limiting the collapse of the lira, it hastened to catch up with the rise in the price of the dollar, which exceeded the level of 100,000 lira, and was unable to confront the speculators, who are major money changers and some banks, and with the participation of some active parties that are able to influence financially.
The Banque du Liban failed to unify the “multiple” exchange rate of the lira, but it succeeded par excellence in unifying and generalizing “dollarization”. He was not satisfied with that, but continued to finance the “wasted” state spending, contrary to the advice of the IMF, which led to the depletion of his foreign exchange reserves by no less than $15 billion, until it reached less than $10 billion.
It is clear from the Banque du Liban’s budget figures that it collected $5 billion last year from the black market, through large money changers who benefited from a 3% commission, but spent $7 billion in exchange for it, including $3.2 billion from its cash reserves.
And with the continuation of the “Sarifa” business in selling the dollar at a price below the market price, the liquidity of the cash reserve continued to be depleted by about 850 million dollars during the first quarter of this year. Thus, the Banque du Liban loses by its intervention, buying and selling dollars, without being able to protect the lira from collapse, but at the same time it profits in gold, as a result of its high global prices.
During a period of three and a half months, he earned about $1.85 billion, as the value of his gold assets increased from $16.38 billion in mid-December 2022 to $18.23 billion at the end of last March. Lebanon has gold reserves of about 287 tons, equivalent to 10 million ounces, and it is among the list of the 20 largest countries in the world, and the second Arab country after Saudi Arabia.
For security reasons, this quantity is distributed between 6.6 million ounces in the vaults of the Central Bank in Beirut, under strict security protection, and 3.4 million ounces kept in protected vaults in Fort Knox in the United States of America.
The yellow metal is the most important safe haven in wars. And with the continuation of the Russian-Ukrainian war and its repercussions, and the expectation that it will expand into a global economic war accompanied by a continuous rise in prices, experts do not rule out that the price of an ounce will jump to 3,600 dollars, which doubles the value of “Lebanon’s gold” to about 36 billion dollars.
However, the Lebanese fear remains that their country will not be able to recover the amount of gold deposited in America, and it depends on the nature of the development of relations between Beirut and Washington, especially since several countries did not succeed in recovering their gold from the United States, including the Netherlands (in 2015) and Germany (in 2016). , Turkey and Venezuela (2018).
Lebanon’s weakness lies in the fact that the Eurobond debt contract agreement includes in one of its clauses the acceptance of submission to the laws of New York courts to resolve any dispute between it and creditors, in the event that it fails to pay its debts in foreign currencies. And since the State of Lebanon officially announced in March 2020 that it would stop paying this debt, foreign creditors are betting on the issuance of an American judicial decision to collect their rights by seizing the Lebanese state’s assets abroad, including the amount of gold subject to American sovereignty, and disposing of it.
This is taking into account that the value of Eurobonds was around $33 billion, and it rose at the end of last year to about $41 billion, as a result of adding the value of interest accrued on them, and more than half of them belong to foreign financial and banking institutions.
* Lebanese writer specializing in economic affairs
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