BDL Reserve for Subsidies to Dry Up in Two Months

Lebanon's Central Bank Governor Riad Salameh speaks during an interview with Reuters at his office in Central Bank in Beirut, Lebanon October 24, 2017.REUTERS/Jamal Saidi
Lebanon's Central Bank Governor Riad Salameh speaks during an interview with Reuters at his office in Central Bank in Beirut, Lebanon October 24, 2017.REUTERS/Jamal Saidi
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BDL Reserve for Subsidies to Dry Up in Two Months

Lebanon's Central Bank Governor Riad Salameh speaks during an interview with Reuters at his office in Central Bank in Beirut, Lebanon October 24, 2017.REUTERS/Jamal Saidi
Lebanon's Central Bank Governor Riad Salameh speaks during an interview with Reuters at his office in Central Bank in Beirut, Lebanon October 24, 2017.REUTERS/Jamal Saidi

In Lebanon, the government’s preoccupation with limiting a staggering hike in coronavirus cases overshadowed its efforts to tackle the equally dangerous file of financing subsidies for basic goods.

With dollar reserves at Banque Du Liban (BDL) dwindling, the Levantine country is inching closer to having to adopt new mechanisms for redistributing available support.

A meltdown without precedent has crashed Lebanon’s currency, paralyzed banks, and sent inflation soaring.

As dollar inflows dried up, the central bank has used its reserves to provide foreign currency for key imports - fuel, wheat, and medicine - and some basic goods.

Political forces, for their part, are demanding the rationalization of subsidies, with some proposing the scrapping of support for some goods to buy more time on other necessities deemed more vital.

Subsidies offered by the state and BDL totaled around $5 billion in 2020. How much of the foreign currency reserves is left for the country to use in the face of its spiraling financial crisis remains a mystery.

Government estimates suggest that Lebanon has less than a billion dollars to go, but the central bank governor, Riad Salameh, has recently said that almost $2 billion are left.

Regardless of projected figures, Lebanon spends an average of $500-$600 million monthly on subsidized goods. This means that remaining reserves, according to the currently approved mechanism, can last between two to four months tops.

Lebanon’s subsidy system provides that importers pay 15% of their total invoices in US dollars and 85% in Lebanese lira, which BDL converts to dollars at the official exchange rate in order to pay foreign suppliers.

According to the latest financial data obtained by Asharq Al-Awsat, the total hard currency reserves at BDL fell to about $24 billion at the end of 2020. It is worth noting that the figure includes $ 5 billion in international debt securities.



Sudan, Russia Agree on Port Sudan Naval Base

Russian Foreign Minister Sergei Lavrov (R) and his Sudanese counterpart Ali Yusuf al-Sharif shake hands during press conference in Moscow, on February 12, 2025. (Photo by Maxim Shemetov / POOL / AFP)
Russian Foreign Minister Sergei Lavrov (R) and his Sudanese counterpart Ali Yusuf al-Sharif shake hands during press conference in Moscow, on February 12, 2025. (Photo by Maxim Shemetov / POOL / AFP)
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Sudan, Russia Agree on Port Sudan Naval Base

Russian Foreign Minister Sergei Lavrov (R) and his Sudanese counterpart Ali Yusuf al-Sharif shake hands during press conference in Moscow, on February 12, 2025. (Photo by Maxim Shemetov / POOL / AFP)
Russian Foreign Minister Sergei Lavrov (R) and his Sudanese counterpart Ali Yusuf al-Sharif shake hands during press conference in Moscow, on February 12, 2025. (Photo by Maxim Shemetov / POOL / AFP)

Sudan and Russia have reached a final agreement on the establishment of a Russian naval base in Port Sudan on the Red Sea, Sudanese Foreign Minister Ali Yusuf al-Sharif announced on Wednesday.

The plan has been discussed for years but never materialized due to the volatile security situation in Sudan.

The deal allows Russia to set up a naval base with up to 300 Russian troops, and to simultaneously keep up to four navy ships, including nuclear-powered ones, in the strategic Port Sudan.

“There are no obstacles, we are in complete agreement,” Sharif said following talks in Moscow with his Russian counterpart, Sergei Lavrov.

He did not elaborate on the terms of the current agreement, and whether the two sides had introduced new amendments to the deal reached between the two countries in 2017.

Lavrov avoided mentioning the military base, but said that during the meeting with Sharif, both sides paid special attention to the war in Sudan.

“We are interested in normalizing the situation in this friendly country, our good traditional partner in Africa, as soon as possible,” the Russian FM said.

“We reaffirmed our principled position on the need for an early cessation of hostilities along with the launch of a national dialogue, which should include representatives of all political, ethnic and religious groups in Sudan,” Lavrov said.

He noted that according to Sharif, the Sudanese leadership published two days ago a roadmap that should pave the way for progress in this direction.

Last December, Russia's embassy in Sudan refuted media reports alleging that the Sudanese authorities refused to host a Russian naval logistics support base.

Earlier in June, Mohamed Siraj, Sudan’s Ambassador to Russia, reaffirmed his country’s dedication to constructing a Russian naval base on the Red Sea.

In 2017, Khartoum and Moscow agreed during a visit by Sudan's ousted former president Omar al-Bashir to Moscow, to establish the base. But in 2021, weeks after Khartoum decided to freeze the deal, Moscow rushed to approve the binding agreement to establish the base in Sudan by passing it through all the legal mechanisms.

Russian President Vladimir Putin referred the agreement to the State Duma for ratification, in the second step of the final approval of the agreement after the Russian government formally ratified it a week earlier.

The Sudanese leadership had informed Moscow of its official position to freeze the deal through military and diplomatic channels.

A Russian source told Asharq Al-Awsat at the time that after referring the document to the Duma and Senate, Moscow is seeking to give it full legal force. This will allow Russia to negotiate later with Sudan to introduce some amendments.

Meanwhile in the Sudanese capital, Chief of Staff of the Armed Forces Mohamed Othman al-Hussein said that “Khartoum intends to review the agreement,” noting that it was approved by the previous government and not the parliament.

Despite Sudan’s position, the Russian Foreign Ministry announced that the agreement remains binding for both parties because it was signed on July 23, 2019, by the representative of the Transitional Military Council, that is, after the change of the political system in Sudan.

Ministry spokeswoman Maria Zakharova noted that the document has not yet been ratified by the Sudanese party because there is currently no legislative authority in the country with such powers.
Zakharova hinted at Russia’s readiness to show flexibility in revising the text of the agreement and said Moscow was interested in strengthening cooperation with Khartoum.
She explained that even before the agreement enters into force, changes can be introduced to its text at the discretion of both parties.

The agreement stipulates establishing a logistics center for the Russian fleet on the coast of Sudan in the Red Sea. It grants Russia the right to use an operational logistic center in Port Sudan, provided that the maximum number of working personnel does not exceed 300 soldiers, and no more than four Russian warships will be able to stay there at one time.
The agreement is valid for 25 years, with the possibility of extension.