One billion dollars to boost Lebanese currency

Published April 9th, 2001 - 02:00 GMT

Lebanon's central bank has spent a billion dollars over the past month to support the Lebanese pound, which has been under strong pressure, the Al-Safir newspaper said Saturday, April 7. 

 

Citing bank sources, Al-Safir said "the central bank's intervention from February 6 until (Friday) surpassed one billion dollars." The newspaper said the strong demand for the greenback was the result "of political friction and people's worries." 

 

The dollar, in high demand in the past week, was traded at up to 1,514 Lebanese pounds and two pounds more at moneychangers. Before February 6, supply and demand on the money market were in balance without central bank intervention. 

 

One banker told AFP the government has boosted intervention amid "rumors of an upcoming monetary and financial crisis and bitter debates of a strong sectarian nature on the presence of the Syrian army in Lebanon." 

 

Prime Minister Rafiq Hariri, elected last year on a promise to revive the economy, has called for international aid so Lebanon can pay off a debt that reached $25 billion at the end of last year, or 147 percent of gross domestic product (GDP), and contain a budget deficit of $3.3 billion for 2001, or 24 percent of GDP. 

 

Bankers say the country's net reserves are currently around one billion dollars and should increase by about $550 million. 

 

Lebanon on Friday took out a loan of one billion dollars. Half of it will go to pay off a loan payment due April 23, with the rest going to the central bank. 

 

Separately, Al-Safir said Oman has decided to deposit $50 million with Lebanon's central bank at four-percent interest over five years. 

 

To support the Lebanese pound, Saudi Arabia has already made a deposit of $600 million and Kuwait one of $200 million. Al-Safir said Qatar will soon deposit $100 million. — (AFP, Beirut) 

 

© Agence France Presse 2001

© 2001 Mena Report (www.menareport.com)

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