Lebanon-External Debt and Foreign Exchange

Lebanon had many economic problems in the 1980s, but foreign debt was not one of them. As late as 1986, the total official foreign debt was estimated at no more than US$250 million. The Bank of International Settlements put the country's external bank indebtedness at US$1.7 billion at the end of 1985, a decline from US$1.78 billion in 1984 and US$1.8 billion in 1983. Of the 1986 total, US$356 million was short-term (one-year) debt. The Organization for Economic Co-operation and Development put total external debt, excluding International Monetary Fund (IMF--see Glossary) credits, at US$938 million at the end of 1984. Long-term debt amounted to US$481 million, and total debt servicing, excluding IMF credit, amounted to US$268 million.

Total foreign reserves greatly exceeded debt. Throughout the 1980s, the Central Bank maintained a tight grip on the country's gold reserves and tried to do the same with its foreign currency reserves. The government held 9,222,000 ounces of gold, officially valued on the bank's books at US$42.23 an ounce and ostensibly worth only US$389 million. In reality, however, it was worth at least US$3 billion.

In 1984 foreign exchange reserves, valued at US$1.9 billion in 1983, declined to US$652 million. In 1985 the reserves fell further to around US$300 million early in the year but recovered sharply to US$945 million in November. Then, at the start of 1986, there was a run on the Lebanese pound, and reserves plunged to US$300 million in March. The Central Bank attempted to counter falling reserves by forcing banks to increase their statutory reserves and take up subscriptions of treasury bills.

Data as of December 1987