Concerns and questions: Lebanon's handling of $1.139 billion in IMF Special Drawing Rights (SDR)

In September 2021, Lebanon received $1.139 billion in its special drawing rights (SDRs) allocation from the International Monetary Fund (IMF). Two years later, it became clear that through the Finance Ministry's numbers, $1.63 billion had been spent, leaving only $76 million in the account.

According to the Finance Ministry, the total amount spent:

-         $478.314 million went to purchasing medications.

-         $163.518 million was used to repay loans to Arab and international financial institutions.

-         $162.174 million was allocated to the Electricité du Liban (EDL) and maintenance companies.

-         $134.152 million was earmarked for wheat support.

-         $69.406 million was spent on fuel.

-         $34.946 million went towards paying interest on SDRs.

-         $13.249 million was allocated for passport expenses.

-         $7 million covered public works and other expenses, with the approval of the Banque du Liban (BDL) and the Finance Ministry.  

-         $683,000 was used for legal expenses, as per the Justice Ministry.

However, questions have arisen about the transparency and legality of these expenditures. The Parliamentary Finance and Budget Committee opened an investigation into these funds' spending with the Finance Minister's presence. Two key issues have come to light:

1-     The creation of a particular account at the BDL for these funds.
 
2-     The absence of legal documentation for the spending, as decisions were made at the Cabinet level and through letters from the Prime Minister.

The committee has highlighted that it previously requested an audit of these expenditures but received no response.

Moreover, information suggests that additional funds may be coming to Lebanon, which could be spent similarly. As a result, the committee has taken action to prevent a recurrence of these violations.

Governmental sources have defended the expenditure, stating that the funds arrived during Lebanon's critical COVID-19 situation, justifying the prioritization of healthcare and medications.

Additionally, they argue that repaying loans to international and Arab institutions was necessary to maintain positive relations.

In the BDL, sources have suggested that the blame should be placed on the former governor, who wielded decision-making power regardless of established procedures.