Salameh: Lebanon can see 4 percent growth if security remains stable
Country records $380 million surplus in january balance of payments
Lebanese Central bank Governor Riad Salameh said the country could record a 4 percent growth in 2009 if the political security conditions remained stable.
"If the political and security situation is stable then we expect a real growth of 4 percent and 4 percent inflation. We also expect to have surpluses in the balance of payments," he said at the launch of a project for fiduciary data office in Lebanon in the presence of the president of the Association of Banks in Lebanon Francois Bassil and a number of financers and bankers.
The Finance Ministry and the International Monetary Fund have revised Lebanon's GDP growth of 3 percent in 2009.
Finance Minister Mohammad Shatah said earlier the crisis may affect the inflow of capitals from Lebanese expatriates working in the oil-rich Gulf countries.
Many large companies in Dubai and Abu Dhabi have suspended many new multi-billion-dollar projects and some of them have laid off more than 15 percent of their workforce.
Lebanon counts heavily on the remittances from Lebanese working in the Gulf region
Lebanon usually receives close to $5 billion in remittances each year, or 25 percent of the country's GDP.
Although Lebanon was partially affected by the global financial crisis, the Lebanese banks and the monetary situation remained stable.
Contrary to the negative outlook in most countries, Lebanon witnessed an impressive growth in bank deposits.
Banks assets in Lebanon are three times higher than the country's GDP.
Economists argue that Lebanon was not exposed to the negative effects of the financial crisis because the central bank prohibited commercial banks from making any investments in subprime properties or risky portfolios and stocks outside Lebanon.
They added that Lebanon was relatively immune from the global crisis but feared that any security incidents before the parliamentary elections could discourage investors from coming to the country.
Salameh said that Lebanon recorded a surplus in the balance of payments of $380 million in January of this year.
He noted a significant rise in people switching from dollar to Lebanese-pound accounts, demonstrating increasing confidence in the local currency.
The governor commented on the central bank's efforts to tackle the problem of loans that may not have been collected.
"We have closed 5,000 files of bank agents and completed $1 billion worth of transactions," he said.
Salameh warned against the loans that are being offered in the non-banking sector which represent between 25 to 30 percent of the total amount of loans given in Lebanon.
He added that car and housing loans in Lebanon have increased in the past few months.
For his part, Bassil underlined the importance of the new office that will be opened soon in Beirut.
"We hope that this office will broaden the lending base for those who could not benefit from these facilities," said the president of the Lebanese banks association. But Bassil admitted that some areas in Lebanon did not benefit from the loans to the private sector.