BEIRUT,13 March 2008 — Lebanon’s government has asked Saudi Arabia to deposit $1 billion at the central bank to boost the country’s foreign currency reserves, the finance minister was quoted as saying yesterday.
“We, as a government, requested from the Saudi leadership a new deposit of value $1 billion. We detected a responsiveness which we hope will be translated soon,” Jihad Azour told the pan-Arab Asharq Al-Awsat newspaper.
“This will strengthen the reserves of the central bank and monetary stability,” said Azour.
Azour told Reuters on Monday there were “positive indications” that Riyadh would make a deposit at the central bank. But he declined to give the amount.
Azour said in the interview with Reuters there was no short-term need for the funds, but the deposit would send “a very positive signal to the market”.
Lebanon’s strong foreign currency reserves, measured at $9.8 billion at the end of 2007, were one reason cited by Moody’s in a Feb. 7 statement for maintaining its low B3 rating on the country’s government bonds.
Standard & Poor’s in January cut its long-term sovereign foreign currency credit rating on Lebanon by one notch to “CCC+” from “B-” because of the political conflict — the worst since the 1975-90 civil war. The crisis has paralyzed much of government, left the country without a president since November and led to bouts of street violence between followers of the rival sides.
Lebanon is saddled by public debt of some $42.06 billion — equal to some 171 percent of its gross domestic product.