One of the most concerning points in the draft “Financial Gap” law approved by the Cabinet and referred to Parliament for review is the fear that Lebanon’s gold reserves could be affected. These concerns emerged after the draft linked bonds to be issued to depositors with deposits exceeding $100,000 to bonds backed by assets of the central bank.

It is true that the draft law protects gold by including Paragraph 2 of Article 12, which states that “certificates enhanced by revenues from assets owned by Banque du Liban and by the proceeds of their liquidation, if any, do not violate the provisions of Law No. 42/1986 issued on 24 September 1986, which relates to the protection of the gold reserves held by the bank.”

However, this article does not eliminate the possibility of disposing of the gold through an amendment to the law by Parliament, should it prove impossible to repay deposits due to insufficient liquidity generated from the central bank’s assets or from the proceeds of their liquidation.

In practice, gold is viewed as a guarantee to strengthen the bonds that are to be issued to depositors, not for its direct sale or pledging, since any such decision would require an amendment to Law No. 42/1986. The concern surrounding the guarantee granted to gold stems from previous precautionary seizures imposed on it.

Discussion of gold has gained strong momentum today, as its value has approached $40 billion amid the continued rise in gold prices. Lebanon ranks second regionally in terms of the size of its reserves, as some of those seeking the fastest and easiest way to close the financial gap turn their attention to this reserve.

The idea of borrowing against the gold reserve has been raised more than once, but it was rejected because this reserve represents a sovereign guarantee and a core element of national financial security for the Lebanese.

In remarks made recently, Finance Minister Yassine Jaber said that the fate of the reserve and the issue of pledging it for borrowing are sovereign decisions that ultimately lie with Parliament. He stressed that the idea continues to face broad opposition and that discussions over the draft law are still at an early stage.

According to a legal source, gold is effectively considered “legally seized” due to the restrictions or ban imposed by Law No. 42/1986, which the draft “Financial Gap” law has reaffirmed. This prevents any use of gold to resolve the financial crisis. The same applies to any attempt to impose a seizure by any domestic or foreign party, since gold is protected and safeguarded by law. As for Parliament amending this provision, that is a different matter, especially given that no political force in Lebanon is capable of taking such a decision, considering what gold represents.

What is required, the source argues, is for Parliament to remove this issue from circulation and exclude gold from the state assets listed in the draft law. Those assets should instead be limited to the real estate portfolio, shares in companies, cash balances, available reserves, and revenues arising from sovereign and private debts owed to the central bank, as stipulated in Article 12 of the “Financial Gap” law.

Disclaimer: The opinions expressed by the writers are their own and do not necessarily represent the views of Annahar