Lebanon’s finance minister signs forensic audit deal with Alvarez and Marsal

The consultancy will submit its report to the Lebanese government within 12 weeks after starting work, the country’s Ministry of Finance says

A view of Lebanon's Central Bank in Beirut, Lebanon. Lebanon’s finance minister Yousef Al Khalil on Friday signed a forensic audit agreement with the global consultancy Alvarez and Marsal to carry out a forensic audit at the country's central bank. Reuters/ Mohamed AzakirShow less

Lebanon’s Finance Minister Youssef Al Khalil signed a forensic audit agreement with the global consultancy Alvarez and Marsal (A&M) to carry out a forensic audit at the country's central bank.

The consultancy will submit its report to the Lebanese government within 12 weeks after starting its work, the country’s Ministry of Finance said.

A&M was tasked with conducting a preliminary forensic audit on Lebanon's central bank. It, however, terminated its contract in November, citing lack of information from the Lebanese Ministry of Finance and the central bank.

The plan for an audit is a key requirement for Lebanon to secure foreign aid as the country goes through its worst financial crisis since independence in 1943 after defaulting on about $31 billion of eurobonds last year.

An explosion at the Port of Beirut in August last year, which killed at least 190 people and destroyed large parts of the capital, further compounded the country's economic woes.

Mr Al Khalil was appointed finance minister on September 10 as part of a Cabinet formed by politician and billionaire Najib Mikati, exactly one year after the previous government resigned. Political wrangling over ministerial posts exacerbated Lebanon’s severe economic crisis, which pushed nearly 80 per cent of the population into poverty, according to the UN.

Mr Al Khalil joined the Lebanese Central Bank as an economist in 1982 and was working as the executive director of the bank's financial operations department before he was promoted as the finance minister of the country earlier this month.

He holds a PhD in economics from the University d’Auvergne, the Centre of Studies and Research on International Development in France, an MA in Development Economics from the University of Sussex, and a BA in Economics from the American University of Beirut, according to his biography.

He also wrote extensively on the economic development of Lebanon and heads a number of non-governmental organisations in Lebanon and abroad, including the Euro-Arab Association for Development and the Lebanese Microfinance Association.

Lebanon's finance ministry will receive $1.135bn in reserve assets, known as Special Drawing Rights, from the International Monetary Fund following a breakthrough in the government formation last week.

The allocation includes $860 million approved this year and $275m from 2009 that will be deposited to the Banque du Liban's account, the ministry said.

Millions of Lebanese, along with Palestinian and Syrian refugee communities, have been affected by the economic crisis that the World Bank has ranked among the world’s top 10 crises – possibly even the top three – since the mid-19th century.

IMF special drawing rights are an international reserve asset created by the Washington-based lender to supplement the official reserves of its member countries.

They are the fund's unit of exchange and are made up of a basket of the world’s five leading currencies – the US dollar, the euro, the yuan, the yen and the British pound.

The IMF’s SDRs help to increase countries’ international reserves and reduce their reliance on more expensive domestic or external debt.