Region | Lebanon

Lebanon hopes Saudi Arabia will show its support - to the tune of $1b

Finance minister requests deposit in central bank to boost reserves

  • Reuters
  • Published: 00:48 March 13, 2008
  • Gulf News

Beirut: Lebanon's government has asked Saudi Arabia to deposit $1 billion (Dh3.6 billion) at its central bank to boost the country's foreign currency reserves, the finance minister was quoted as saying on Wednesday.

"We, as a government, requested from the Saudi leadership a new deposit of $1 billion. We detected a responsiveness which we hope will be translated soon," Jihad Azour told the pan-Arab Asharq Al Awsat newspaper. "This will strengthen the reserves of the central bank and monetary stability," said Azour, whose government is locked in a paralysing political struggle with opposition forces led by Hezbollah and backed by Syria.

Saudi Arabia is a strong backer of the Beirut governing coalition. Azour told Reuters on Monday there were "positive indications" that Riyadh would make a deposit at the central bank. But he declined to give the amount. Azour said in the interview with Reuters there was no short-term need for the funds, but the deposit would send "a very positive signal to the market".

Lebanon's strong foreign currency reserves, measured at $9.8 billion (Dh36 billion) at the end of 2007, were one reason cited by Moody's in a February 7 statement for maintaining its low B3 rating on the country's government bonds.

Standard & Poor's in January cut its long-term sovereign foreign currency credit rating on Lebanon by one notch to "CCC+" from "B-" because of the political conflict - the worst since the 1975-90 civil war.

The crisis has paralysed much of government, left the country without a president since November and led to bouts of street violence between followers of the rival sides.

Lebanon is saddled by public debt of some $42.06 billion (Dh154 billion) - equal to 171 per cent of its gross domestic product.

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