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Lebanon currently holds only about 10% of the International Monetary Fund (IMF)’s Special Drawing Rights (SDRs). In other words, the Lebanese state has disbursed 90% of the $1.139 billion representing Lebanon’s share transferred by the IMF to the Lebanese state in September 2021.
On September 16, 2021, the Ministry of Finance announced that it had received its share of the IMF’s Special Drawing Rights, amounting to $1.139 billion, which it had deposited in its account with the Banque du Liban (BDL). The government at that time, led by Najib Mikati, had announced that it would only use this amount to fund an integrated plan that would help Lebanon emerge from its crisis, or for funding development projects. However, today, only $125 million of the initial SDR amount remains!
In a recently published statement, the First Deputy Governor of the BDL, Wassim Mansouri, who is assuming the role of acting governor, explicitly confirmed that the Lebanese state has spent 90% of the SDR amount.
SDRs are a financial instrument, used between the international organization and its members, and have no connection to the financial assistance that the IMF intends to unlock for Lebanon as part of an assistance program.
The remaining $125 million in SDRs are categorized as foreign exchange reserve commitments of the BDL, as they are funds that cannot be freely utilized and can only be disbursed at the request of the state.
Where Has This Money Gone?
Thus, where has the money from these SDRs gone? Some sources close to the Ministry of Finance provided relevant figures to This is Beirut. Among other uses, $35.5 million was used for external loan payments, €13.2 million for payments owed to the French Development Agency, $48 million for the payment of medicines for chronic diseases, including cancer, medical equipment, milk and raw materials for drug manufacturing, $60 million for funding power plant maintenance contracts, $10 million for essential facilities maintenance at Beirut International Airport (BIA), $35 million for purchasing medicines, $27 million for wheat and flour purchases and $6.5 million for the removal of chemicals from oil facilities in Tripoli.
What Are Special Drawing Rights (SDRs)?
As a reminder, SDRs are international reserve assets initiated in 1969 by the International Monetary Fund (IMF) to enhance the foreign exchange reserves of its member countries. They are not a currency, but rather a budget line in the balance of payments of IMF member countries (190), which they can exchange for currencies.
Under certain conditions, and with the agreement of 85% of the board of governors’ votes, the IMF can make a general allocation of SDRs, as Lebanon benefited from in September 2021. When an allocation is approved, SDRs are allocated to member countries. Countries holding SDRs can then use them freely without increasing their debt. They can use them to repay their obligations to the IMF, hold them as collateral, or exchange them among countries for currencies (at a lower interest rate than in regular markets) to fill their foreign exchange reserves or make payments.
In total, these allocations have amounted to the equivalent of $318 billion, of which $251 billion was in response to the 2009 financial crisis. The value of SDRs is calculated based on the exchange rates of a set of currencies, with the dollar determining 42% of the value of SDRs.
