In response to your article (“Lebanon central bank chief in spotlight over $6bn boost to assets”, July 22), Banque du Liban would like to confirm the following points.
BdL adopts monetary, financial and accounting policies that are all approved by its central council board in accordance with the relevant articles of the code of money and credit which governs the activities of BdL. The board includes the governor as head and six other members, each having one vote; thus the governor’s actions represent an execution of the board’s decisions, and are not arbitrary decisions as stated in your article.
Cost deferral as well as various categories of seigniorage are all reflected in full transparency in the bank’s financials which are approved yearly by the central council board before being submitted to the finance ministry as required by the money and credit code.
Additionally, BdL’s biweekly published balance sheet transparently references seigniorage balances as being part of other assets.
Several central banks adopt cost deferral in order to achieve their objectives and deliver on their mandates.
BdL had to adopt it for relatively larger balances and for longer periods compared with other central banks, as Lebanon has been witnessing exceptional circumstances for most of the past 15 years, to maintain financial stability while awaiting the required government reforms.
In short, deferred costs that have accumulated over the past 15 years resulted from BdL’s intervention to support the government’s finances (including the impact of the public servants’ salary scale increases) and secure monetary, financial and economic stability for Lebanon (especially given the Syrian refugees’ impact on the country’s economy since 2011) in the absence of government reforms.
The allegation made in relation to the creation of the fictitious L£10tn ($6bn) asset referred to in the article is a misrepresentation of the related contents of the leaked financial statements as it represents an integral part of the deferred seigniorage cost designated for financial stability in accordance with BdL’s accounting policy as approved by its board.
Halim Berti Banque du Liban Beirut, Lebanon