$1 billion to be deposited by Saudi in Lebanon”s Central Bank

 

Saudi Arabia is planning to deposit another one billion US dollars with Lebanon”s central bank in the coming days as part of the kingdom”s support for the country”s economy, An Nahar newspaper reported Friday.

 

The new move will increase the Saudi deposits to US$2 billion . King Abdullah in 2006 granted the Lebanese Central Bank US$1 billion to shore up its currency and US$500 million in aid to help rebuild the country after the Israeli Hezbollah war in the summer of 2006.

 

However Lebanon”s financial community is split over the real motives of the Saudi gesture which has received mixed reactions from Lebanese bankers and economists.

 

“After some rating agencies cut their sovereign rating of Lebanon as a result of the political deadlock, Saudi Arabia apparently took this step to improve the rating of the country and encourage the swapping of the matured Eurobonds,” Saad Andary, the adviser to the chairman of Bank of Beirut and the Arab Countries, told The Daily Star on Friday.

 

“This step will help rejuvenate the Lebanese economy,” Andary said, adding some foreign investors seem keen to subscribe to the Lebanese Eurobonds.

 

He added that the Saudi initiative will revive interest in Lebanese bonds and Eurobonds this year.

 

The resserves are currently at about US$20 billion, US$9 billion of which are gold reserves.