SDR money: this is how it is spent and this is how it stays

Since Lebanon received its share of special drawing rights distributed by the International Monetary Fund in September of last year, that is, about a year and a quarter ago, there has been absolute uncertainty surrounding these funds. No one was clear about the destination of the planned spending, nor its actual state in any of the months, or even how it was recorded in the budget of the Banque du Liban, which deposited that amount as the “State Bank”. In fact, there have been many analyzes that fear that the Central Bank pooled these funds with the remaining reserves it had, in exchange for recording a “liability” in the interest of the Lebanese state, which could later be paid at an exchange rate, from those rates that are arbitrary chosen by the ruler of the bank.

The other half a billion
Yesterday, the representatives received a copy of the complete statement from the account, issued by the Ministry of Finance, with the main balance and the remaining balance of these funds, with the intention of spending the amounts from this account from 2021. What is encouraging about this statement, despite the delay in its release, is that the Treasury Department has already opened an independent and separate account for the funds from the right of withdrawal, allowing them to be spent as fresh dollars, and in a way that differentiates them from others. accounts and exchange transactions between the Central Bank and the Ministry of Finance. It seemed clear that all the expenses listed in the statement were related to dollarized payments, which were paid in hard currency, confirming that none of those dollars were received from the central bank of the country in pounds, and at an exchange rate that understated their real value.

In the summary of the statement, the following can be confirmed: The balance received by Lebanon from the IMF was 1,139,951,437 US dollars ($1.14 billion), of which the Ministry of Finance has spent 636,100,565 US dollars (636.1 million dollars), while the rest of these funds to date amount to $503,850,872 ($503,850,872), which is almost half a billion dollars). The announcement shows that the Ministry of Finance only started spending from this account in April last year, although it announced its distribution in mid-September last year, indicating that the Lebanese state did not complete the procedures to receive the amount until about eight months after the announcement was made. adjust it .

Amount of consumption destination
The status report provided by the Ministry of Finance details the payments allocated to each spending section, which can be summarized as follows:

– Electricité du Liban payments: they accounted for the largest share of money spent. Because the institution’s appropriations from these funds amounted to about $221.59 million, and it is not clear whether these funds went to purchase fuel or to pay the appropriations of contractors or contractors (such as companies that provide services or maintenance and supervision). Noting that the Corporation and the Ministry of Energy have not published transparent and clear payment priority criteria for these parties. These payments began in June and continued until November (nine payments), including one payment called the payment of a loan owed to Electricité du Liban.

– Payments for the import of drugs: These payments include funds that were used to continue supporting the import of drugs for incurable diseases. The combined volume of payouts was about $190 million, and their dates ranged from the oblivion of the past to this January.

– Payments for wheat imports: Includes money used to continue subsidizing wheat imports, worth $112 million, which was spent from last April to this January.

– Repayment of loans to the Lebanese state: the value of these funds was 95 million dollars, and it also included repayment of loans to various international and regional institutions.

– Payment of the value of two passport loans, worth approximately 13 million dollars (payments dated last May).

– Commissions paid for the collection of special drawing rights, in the amount of 4 million dollars.

Legal fees collected from the Department of Justice in the amount of $683,000, with no statement of account explaining the reason for the fees or the nature of the services that were to be substituted for that amount.

Random wear
Controversies and doubts about the fate of these funds were resolved, therefore, by accounting, confirming that the funds continue to be spent exclusively in the interest of the Lebanese state, and their fate is not mixed with the mass of losses that are currently within the Banque du Liban. However, what is also certain is that the spending of this amount is still managed with a frightening randomness, as a result of the absence of balanced financial planning that defines the spending priorities of the Lebanese state at the current stage, in a way that integrates with its economic goals and the recovery plan it is working on . Rather, the paradox is that in spending the amount during the current year, an integrated budget that allocates the necessary funds for each part of spending was not even reached.

Finally, at this rate of spending, the remaining balance in this account is not expected to be sufficient for more than the middle of next year, depriving the Lebanese state of sufficient liquidity to spend on the most urgent needs. Until then, it is assumed that the state – in agreement with the Banque du Liban – will realize the vision of equalizing the exchange rates, which will enable it to buy hard currency from the Banque du Liban at a single exchange rate, and tax revenues after the correction of the exchange rate approved for their collection.