Lebanese Central Bank Rejects Proposals to Invest Gold Reserves
The sharp rise in the market value of Lebanon's gold reserves has sparked renewed debate over their potential use to support the country's financial recovery. However, the central bank remains firm in its stance against any move to liquidate or invest the reserves, citing strict legal restrictions and the risks of mismanagement.
A senior financial official, speaking to Asharq Al-Awsat, acknowledged the significance of these discussions, particularly as the central bank's updated figures estimate Lebanon's gold holdings at around $28 billion. However, he emphasized that before considering any new policies, a full qualitative audit of the reserves is necessary to determine their exact value, weight, and historical origins.
Lebanon officially holds approximately 286.8 tons of gold, or 9.25 million ounces. This reserve was accumulated under the 1963 Monetary and Credit Law to back the Lebanese lira. Currently, two-thirds of the gold is stored securely at the central bank in Beirut, while the remaining third is held at Fort Knox in the United States.
Despite the growing interest in leveraging this asset, Lebanese law strictly prohibits any direct or indirect transaction involving the gold. Law No. 42 of 1986 mandates that any sale, leasing, or investment of the reserves must receive explicit approval from Parliament. Acting Central Bank Governor Dr. Wassim Mansouri has reaffirmed this restriction, stating unequivocally: 'No matter what happens, I will not sign off on moving even a gram of gold.'
Mansouri also highlighted the dangers of using reserves irresponsibly. Before Lebanon's financial collapse in late 2019, the central bank held around $33 billion in foreign currency reserves, while gold reserves were valued at $16 billion. The cash reserves were largely depleted through unsustainable subsidy programs, leaving only $8.5 billion today. 'We lost one and a half times the value of our gold, and it didn't solve anything. The idea of using gold is simply not an option,' he said.
While some policymakers argue that investing the gold could generate much-needed revenue, financial experts warn that without proper governance, such a move could lead to further mismanagement. Instead, they stress the need for deeper economic and institutional reforms.
A key priority is securing an agreement with the International Monetary Fund (IMF) to ensure financial discipline, transparency, and oversight. Any decision regarding the gold reserves would require parliamentary approval and a clear, well-justified plan. However, financial experts argue that Lebanon already possesses vast state-owned assets that, if managed properly, could help close the country's estimated $72 billion financial gap.
These assets include coastal and riverfront properties, 850 million square meters of state-owned land, high-value real estate in Beirut and other cities, as well as key infrastructure such as electricity, water, telecommunications, ports, and transport networks. Many of these resources remain underutilized due to corruption and inefficiency.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Arab News
a day ago
- Arab News
Jordan's foreign exchange reserves hold steady at $22.76bn in May
RIYADH: Jordan's foreign exchange reserves remained largely unchanged in May, standing at $22.76 billion, as per new data released by the Central Bank of Jordan. The slight month-on-month dip — about 0.2 percent from April — reflects broad stability in the Kingdom's external buffers. Jordan's foreign exchange figures are broadly in line with trends observed across other Middle East and North African countries. The Qatar Central Bank recorded a 3.6 percent increase in its foreign currency reserves and liquidity, reaching 258.135 billion Qatari riyals ($70.9 billion) in May, up from 249.165 billion riyals in May 2024. Egypt's foreign exchange reserves rose to $48.525 billion by the end of May, compared to $48.144 billion in April, marking an increase of $381 million. 'The Central Bank of Jordan stated in a statement today that its total foreign reserves are sufficient to cover the country's imports of goods and services for approximately nine months,' the Qatar News Agency reported. The central bank also reported that gold holdings at the end of May were valued at $7.76 billion, totaling 2.345 million ounces, underscoring the role of bullion in Jordan's reserve composition. 'It added that the presence of comfortable levels of foreign reserves enhances the ability to influence exchange rates, provides a stable economic environment, and enhances the confidence of foreign creditors and investors,' the QNA report stated, citing the Jordan Central Bank. In May, Jordan's long-term foreign-currency issuer default rating was affirmed at 'BB-' with a stable outlook by Fitch Ratings, citing the country's macroeconomic stability and progress on fiscal and economic reforms. The US-based credit rating agency noted that the rating and stable outlook also reflect Jordan's resilient financing sources — including a liquid banking sector, a robust public pension fund, and sustained international support. Despite the stable outlook, Jordan's credit rating remains below that of several other countries in the region. In February, Fitch affirmed Saudi Arabia's IDR at 'A+' with a stable outlook, while the UAE was rated 'AA-.' Fitch said the ratings are constrained by high government debt, moderate growth, risks from domestic and regional politics, as well as current account deficits and net external debt levels that exceed those of rating peers. A 'BB' rating indicates elevated vulnerability to default risk, particularly in the event of adverse shifts in business or economic conditions. However, it also suggests some degree of financial or operational flexibility in meeting commitments. Fitch also noted that Jordan's government remains committed to advancing its three-pillar reform agenda — spanning economic, public administration, and political sectors — despite external pressures. The agency added that the pace of reforms will continue to be shaped by the need to preserve social stability, resistance from vested interests, and institutional capacity limitations.
Al Arabiya
2 days ago
- Al Arabiya
Syria to be relinked to SWIFT payment system
Syria will be fully reconnected to the SWIFT international payment system 'in a matter of weeks' after more than a decade of sanctions, central bank governor Abdelkader Husrieh told the Financial Times in an interview published on Monday.
Asharq Al-Awsat
3 days ago
- Asharq Al-Awsat
Vujcic: ECB Should Not 'Overreact' if Inflation Edges Below 2%
The European Central Bank should not "overreact" to euro-zone inflation edging below its 2% target as there are good reasons to believe it will come back up, ECB policymaker Boris Vujcic told Reuters. The ECB cut interest rates on Thursday for the eighth time in a year but signaled at least a policy pause next month, despite projecting inflation at just 1.6% next year. Inflation in the 20 countries that share the euro was 1.9% in May, according to a flash reading published last week. Vujcic, who is also Croatia's central bank governor, said price growth was likely to bounce back later and that monetary policy should not try to do "precision surgery" on small fluctuations from its goal. "A few tens of basis points' deviation on either side of the target is not a problem," Vujcic said in an interview on Saturday in Dubrovnik. "Because you will always have small deviations. If you consider them as a problem, then you will overreact. This is not precision surgery." Vujcic said it was reasonable to expect inflation to edge back up as energy prices find a bottom and the economy accelerates. Euro strength is also unlikely to have second-round effects on prices unless it lasts several quarters, Vujcic said. Some ECB policymakers, especially Portugal's central bank governor Mario Centeno, worry that euro-zone inflation may slow too much. Vujcic said he sees the risks surrounding the inflation outlook as "pretty balanced" but cautioned there was "complete uncertainty" surrounding global trade tensions with US President Donald Trump's administration. Vujcic recalled advice he received as a young deputy governor from then-Federal Reserve Chair Alan Greenspan: a high rate of inflation was more dangerous than a low one. Greenspan cited two decades of relatively benign deflation in the late 19th century, which was partly due to improvements in productivity, Vujcic said. "Nobody cared about low inflation because of the productivity growth," he said. "You have a monetary policy problem to bring it up. Yes, but why would you insist so much if you don't have a problem in the economy?" The ECB is reviewing its long-term strategy, including the role of massive bond purchases, or quantitative easing, in reviving inflation when it is too low. The ECB injected some 7 trillion euros ($8 trillion) of liquidity into the banking system through QE and other tools over the past decade. These schemes were blamed for inflating bubbles in real estate and setting up the central bank for sizeable losses. "The next time around, people will take the lessons from the previous episode, and I think that the bar for QE would be higher," Vujcic said. He said QE could help stabilize dysfunctional markets - such as during the 2008 financial crisis and the COVID-19 pandemic - but if used "for years and years to try and bring inflation up, its marginal efficiency declines". Such calls for self-criticism are shared by some policymakers in the ECB's hawkish camp. But sources told Reuters they were unlikely to feature in the ECB's new strategy document, to be published this summer.
