DAILY STAR
20 Apr 2017
DAILY STAR
An increase by 1 percent in interest rate base rate in Lebanon would add $1.3 billion burden to the government’s Treasury, Central Bank Governor RiadSalameh said Tuesday. “An increase in interest rates will add a burden to the government’s budget in addition to affecting the budget of the private sector not to forget that it may as well hinder economic growth,” he said during the opening of a business forum at Phoenicia Hotel.
Dubbed “Business and Financial forum: Regaining the Trust,” the forum was organized by Confex International in cooperation with the Central Bank in a bid to discuss financial and economic challenges facing Lebanon in the years to come.Salameh said that the additional cost that would stem from an increase in interest rates will remain and it will not disappear, noting that the public debt has reached $75 billion while the private sector’s debt reached $58 billion.Less than a month ago, the U.S. Federal Reserve raised interest rates for the second time in three months. But Lebanon kept its interest rates steady. The average interest rates on dollar deposits in Lebanon are around 3.5 percent compared to 1 percent in the U.S.Salameh said that the central bank is committed not only to maintain a fixed exchange rate for the Lebanese pound but also to keep interest rates stable even if they are increasing on regional and international levels.“The interest rate on Lebanese deposits today is less than that paid on Egyptian and Turkish pounds noting that interest rates in the Gulf region are increasing as well,” he said.Salameh said that Lebanon relies to a great extent on the flow of deposits by Lebanese expatriates and which close the gap in the trade balance. “This is why we are always keen on ensuring our sector’s commitment to international regulations while preserving our country’s sovereignty,” he said.Salameh said that the banking sector grew by 9 percent in 2016 due to the financial engineering conducted by the central bank and which helped in maintaining the stability of the Lebanese pound in addition to improving the balance of payment without any increase in interest rates.
“The central bank has the capacity to maintain a stable Lebanese pound but this does not phase out the need to adopt concrete reform measures in the government’s budget,” he said. “We are sure that [with] the government of Prime Minister Saad Hariri there will be many initiatives to improve financial conditions.”
Meanwhile, Joseph Torbey, president of the Association of Banks in Lebanon, said that the government must benefit from the commercial banks’ excess in liquidity by encouraging the funding of projects that offer public services.
He said that total lending by banks stands at $95 billion with $60 billion for the private sector. “Despite the recession that was witnessed in the past few years, lending indicators to individuals and companies remained high,” he said.
Torbey said that banks all over the world are bound to participate in the fight against financial crimes and namely money laundering, tax evasion and the fight against funding terrorism and Lebanon has shown great commitment in this field. “We will continue our fight against financial crimes by protecting our financial system and all its departments,” he said.
For his part, Industry Minister Hussein Hajj Hasan, who spoke in the first session of the forum, called for $10 billion investment in infrastructure over seven years. “Our infrastructure in Lebanon is equipped to serve 3 million only but it is used today for over 6 million people. We need a political will today to allocate money for such investments,” he said.
He added that the government must work on regaining trust by adopting economic measures such as passing the budget and the salary scale, approving the private public partnership law in addition to approving a law for tax reforms.
“Lebanon cannot go on without adopting a unified economic vision,” he said.
le='font-size:9.0pt;font-family:"Tahoma","sans-serif";color:black'>.وألقى رئيس جمعية المصارف جوزف طربيه كلمة أكد فيها ان "أمام لبنان فرصة حقيقية للشروع في ورشة وطنية شاملة للاصلاح الاداري والمالي ومكافحة الفساد المستشري وسد منافذ الهدر وتحجيم التهرب الضريبي". وشدد على أهمية "مجموعة من المرتكزات التي شكلت مظلة حماية للقطاع ومكنت المصارف من حفظ كياناتها وأنشطتها داخل لبنان وضمن خريطة انتشارها الخارجي، رغم الارباكات المحلية وانكماش الاقتصاد والاستهلاك، وتداعيات الحروب والاضطرابات في المنطقة. ومن هذه المرتكزات الاستقرار النقدي، واستمرار القطاع المصرفي في تأمين الحاجات المالية للدولة". وأشار الى اهمية أن تستفيد الدولة والاقتصاد من الفوائض المالية لدى المصارف، من خلال فتح فرص تمويل المشاريع المرتبطة بالخدمات العامة، وبالأخص منها ذات العوائد لمصلحة الخزينة العامة. كما شدد على ان المصارف اللبنانية ملتزمة مكافحة تبيض الاموال وتمويل الارهاب وتحصين الجهاز المصرفي ووحداته الناشطة داخليا وخارجيا.