- 15:40
Lebanon’s Central Bank (BDL) Governor Karim Souhaid unveiled on Friday the bank’s first semi-annual macroeconomic report in a revised format.
In a country where figures are often subject to interpretation and fiscal data remains scarce or unreliable, Lebanon’s Central Bank (BDL) seeks to reaffirm its role as a reference point for institutional investors and international markets. It also aims to provide citizens with clear benchmarks to better understand the rationale and direction of its upcoming monetary policy.
The report draws on data compiled by BDL itself, moving beyond raw statistics to deliver analyses grounded in scientific methodologies.
With this initiative, the institution signals a break with the past and a commitment to greater transparency in monetary policy. In doing so, BDL is working to redefine both its mandate and its scope of action. “Situations of rupture demand changes,” said a source close to the institution, adding that “the solution will necessarily be collective,” a call addressed to other financial actors.
BDL has also pledged to constantly improve reporting, with the ambition of making it a neutral, objective and agnostic tool, according to another source who spoke with cautious optimism.
The main highlights are as follows:
Modest Growth Outlook
According to BDL’s semi-annual macroeconomic report of June 2025, the Lebanese economy showed initial signs of recovery in the first half of 2025 after several years of crisis worsened by political instability and the armed conflict in 2024. This fragile recovery is supported by recent political stabilization, including a new president, a new government and a BDL governor, which have strengthened market confidence and helped restore normal institutional functioning.
Following a 6.4% contraction in 2024, Lebanon’s real GDP is expected to see modest growth in 2025, driven by political progress, tourism and domestic consumption.
Despite these positive signs, recovery remains fragile amid a challenging global environment, with slowing growth, inflationary pressures and a weaker US dollar. Regional tensions, including the war in Gaza, attacks in southern Lebanon and the prolonged Syrian refugee crisis, continue to weigh on security and economic prospects.
“The national indicators remain cautious but suggest conditional optimism for the Lebanese economy,” notes the report. Real-sector indicators confirm this careful optimism, as BDL’s composite economic activity index returned to positive territory in the first half of 2025, reflecting gradual improvements in trade and tourism.
Underlying Inflation Remains High
Overall inflation fell to 15.0% year-on-year in June 2025, down from 41.8% in June 2024, supported by exchange rate stability, improved fiscal discipline and tighter monetary policy. However, underlying inflation remains elevated at 16.4%, showing that while imported price pressures have eased, domestic tensions persist.
In short, the decline in headline inflation is positive in the short term, reflecting market stabilization and the impact of economic policies. At the same time, persistent underlying inflation highlights that Lebanon’s economic recovery remains fragile and that the cost of living for citizens remains high, despite control over imported prices.
BDL’s Central Role
Since 2019, Lebanon’s banking sector has been severely weakened, with a 40% reduction in branches and a near-halving of employment, while “non-bank financial channels have significantly expanded,” according to the report. In this context of crisis and the absence of a credible recovery plan, BDL has played a pivotal role. It has safeguarded depositors’ rights, maintained banking sector stability and mitigated exchange rate volatility. To strengthen liquidity and solvency, BDL issued several circulars (154, 158, 166) allowing for the gradual withdrawal of dollar deposits, attracting roughly $4.2 billion in new deposits and providing temporary relief to depositors, “even though these measures do not replace a full restructuring,” notes the semiannual report.
Between June 2019 and June 2025, commercial banks’ balance sheets declined by nearly 60%, with loans to customers falling to $5.5 billion and new credit totaling just $553 million, highlighting the severely constrained intermediation role of banks. New deposits reached $4.4 billion by the end of June and remained fully provisioned under BDL Circular 150, offering limited support for credit growth.
Current Account Deficit Eases
In 2024, Lebanon’s current account deficit slightly fell to $5.6 billion due to reduced imports, while diaspora transfers of $5 billion eased financial pressures, though increasing the country’s dependence on these flows.
BDL’s foreign exchange reserves, excluding gold, reached $11.3 billion by mid-2025, supported by the cessation of costly currency interventions, subsidies and direct government financing. Gold reserves surged 41% to $30.28 billion, buoyed by rising global prices.
Lebanon and the FATF
Following Lebanon’s placement on the Financial Action Task Force (FATF) gray list in October 2024, BDL, in coordination with the Special Investigation Commission, strengthened anti-money laundering and counter-terrorist financing (AML/CFT) measures, restored confidence in the financial system and aligned the country with international standards.
In parallel, Parliament reformed banking secrecy laws and advanced efforts on bank restructuring, as well as the “Financial Stabilization and Depositor Recovery Law.”
According to BDL’s macroeconomic report, despite persistent political and economic risks, these institutional and legislative advances point to “a possible turning point.” If these efforts continue and are coupled with rapid reforms, they could lay the groundwork for “a more sustainable and inclusive recovery.”
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