Lebanon depletes IMF SDR funds, leaving municipal elections unfunded

In 2021, Lebanon received $1.139 billion in Special Drawing Rights (SDR) from the International Monetary Fund (IMF). According to reports, the entire amount has been spent, leading to a decision not to fund municipal elections from these funds. Instead, the Lebanese Parliament was approached to secure the necessary financing.

Sources suggest that part of the SDR funds was also used by the Central Bank of Lebanon to intervene in financial markets, particularly given a decision to avoid touching mandatory employment or mandatory reserves. Any violation of this decision could result in legal prosecution.

Insiders at the Central Bank of Lebanon claim that the Ministry of Finance is aware of the actual amount spent from the SDR funds but remains secretive about the figures. The Central Bank reportedly sends clear documentation of the withdrawn amounts and their usage to the Ministry, with disbursements occurring only after the Ministry of Finance and the Prime Minister's approval.

While other reports indicate that over $700 million has been spent from the SDR funds so far, it is worth noting that SDR figures are listed as part of the Central Bank of Lebanon's foreign currency assets. These assets appear in the Central Bank's biweekly balance sheet without specific details related to spending.

The Central Bank's balance sheet from mid-March showed that reserve assets, or what is known as the mandatory reserve, amounted to $9.44 billion, recording a decline of approximately $709 million since the beginning of the year. The decline in reserves from mid-March 2022 to mid-March 2023 reached $2.1 billion.