Mikati: Central Bank to take measures to protect the economy

Prime Minister Najib Mikati said on Thursday that the Central Bank of Lebanon is taking appropriate measures to protect the country’s economy sector.

“The Lebanese banking sector is essential for Lebanon’s economy,” he said according to National News Agency.

“No Lebanese citizen, whether he [works] in the public sector or banking sector, can expose the banking sector to any danger.” He said without elaborating

Mikati’s statement comes after Central Bank Governor Riad Salameh said Wednesday during an interview by Russia Today TV that the political upheavals gripping many Arab countries had dire effects on the overall performance of most Middle East economies, including Lebanon.

“Since Lebanon’s economy is so closely intertwined with that of neighboring Syria, the unrest across the border has taken a huge toll on the Lebanese economy,” he added.

Lebanon’s GDP grew 7.5 percent annually between 2007 and 2010. However, the latest growth forecast for the country has shrunk from a high of 7 percent to a low of 1.1 percent.

Salameh acknowledged that Lebanese banks with operations in Damascus have been impacted by the events in Syria.

Economic experts agree with Salameh saying that the transition from autocracy to democracy in the Middle East is likely to be bumpy and unstable, at best.

Salameh however tried to play down the impact, saying that Lebanon was able to manage the repercussions through financial maneuvering and that the country has yet to experience decelerated growth.

“The negative impact has not reached a crisis stage as Lebanon is expected to record a growth of 2 percent in 2011,” he explained without elaborating

The governor also denied reports of illegal Syrian capital flow into Lebanon, adding that the Lebanon’s growth in deposits dropped this year when compared to 2010.

The latest data supports his claim. Deposits grew 5.4 percent in the first eight months of 2011, compared to growth of 7.3 percent in the first eight months of 2010, according to numbers by data provider, Economena Analytics.

The Lebanese economy has been a great concern ever since the Iranian and Syrian backed Hezbollah militant group brought down the pro-western government of former PM Saad Hariri.

The new government of PM Mikati is completely dominated by Hezbollah and its allies.

Agencies