IMF Reports $49 Billion Losses at Lebanon Central Bank as Bailout Talks Drag

The IMF has warned Lebanon that its central bank has accumulated losses of as much as $49bn, as divisions between the government and the Banque du Liban threaten to derail vital bailout talks with the multilateral lender, the Financial Times reported. The BDL does not publish profit and loss accounts. In recent years, it has used a complex series of sovereign debt and currency swaps with local lenders — what the central bank governor has called “financial engineering” — to shore up the banking sector, attract foreign currency and stabilise the Lebanese pound, which is pegged to the US dollar. That activity, combined with the impact of Lebanon’s default in March on the bank’s sovereign bondholdings and a collapse in the value of the currency, has resulted in accumulated losses of about L£170tn ($49bn), the IMF has told the finance minister and central bank governor, according to people familiar with the matter. Read more