Lebanon’s central bank is preparing a stimulus package to revive growth in an economy hit by armed conflict in neighboring Syria, the country’s central bank governor said.
Riad Salameh said in an interview with Dow Jones Newswires that the Bank of Lebanon is putting the finishing touches to a program aimed at boosting the housing market and spurring construction.
The central bank will finalize the program’s details, including its size, in December, Mr. Salameh said. It is to be launched early next year and will allow banks to tap cheap central bank credit to fund mortgage lending and drive growth. It follows an earlier push to promote extra investment in productive industries and energy.
“We believe once demand is higher in the housing sector it is going to drive all other sectors to better activity,” he said.
Lebanon’s economy expanded 3% in 2011, according to the World Bank, but is tipped to expand just 2% in 2012 due in part to the armed revolt in Syria against President Bashar al-Assad’s regime, a conflict which has hurt activity across the region.
Lebanese banks have had a longstanding presence in Syria but are now “not willing to risk their reputation to take commercial risks” there, said Mr. Salameh. The banks have subsequently cut their loans in Syria by 60% to around $2 billion and set aside $400 million to cover potential losses, he said.
“By preserving the confidence in the financial sector, and by preserving the stability of the Lebanese pound, we have been able to keep the potential to restart higher growth in tact.”
Mr. Salameh said the central bank has instructed its lenders to respect international sanctions against the Syrian regime. Lebanon and its banks are also complying with international sanctions against Iran, he said. The U.S. Treasury intensified its scrutiny of Beirut’s banking system earlier this year amid concerns it was being used to launder money on behalf of militant group Hezbollah.
“No Lebanese bank will work in a currency or with a bank that is in countries that have issued sanctions,” Mr. Salameh said.
“The Lebanese banks will not work with countries, companies or persons on these sanctions lists. We have been able to demonstrate that internationally and we believe these doubts about what could be done via the Beirut banking sector are now behind us,” he added.
Mr. Salameh was in London to promote plans to revive Beirut’s standing as a financial center as it faces stiff competition from rivals in the wider Middle East region, such as Dubai.
The central bank chief said the city aims to build a capital market focused on start-up enterprises and small businesses. Oil and gas production and associated services will be key sectors targeted, he said. An important part of the plan is to privatize the Beirut stock exchange, which should happen some time in the next two years.
As tensions flare across the Middle East, Mr. Salameh said Lebanon has learned there is little point waiting for periods of relative calm to embark on new ventures.
“Our experience in Lebanon taught us that you have to operate, not to wait until everything is clear and quiet, because you would lose opportunities and lose time. It’s like asking Japan not to do anything until they don’t have earthquakes.”
Annual inflation in Lebanon is expected to be around 6% for 2012, reflecting higher energy prices, Mr. Salameh said. The central bank aims to keep inflation at 4% and Mr. Salameh said officials will drain liquidity from the banking system to hit their target next year if public sector wage increases threaten to keep inflation above target.ebanon’s central bank is preparing a stimulus package to revive growth in an economy hit by armed conflict in neighboring Syria, the country’s central bank governor said.
Riad Salameh said in an interview with Dow Jones Newswires that the Bank of Lebanon is putting the finishing touches to a program aimed at boosting the housing market and spurring construction.
The central bank will finalize the program’s details, including its size, in December, Mr. Salameh said. It is to be launched early next year and will allow banks to tap cheap central bank credit to fund mortgage lending and drive growth. It follows an earlier push to promote extra investment in productive industries and energy.
“We believe once demand is higher in the housing sector it is going to drive all other sectors to better activity,” he said.
Lebanon’s economy expanded 3% in 2011, according to the World Bank, but is tipped to expand just 2% in 2012 due in part to the armed revolt in Syria against President Bashar al-Assad’s regime, a conflict which has hurt activity across the region.
Lebanese banks have had a longstanding presence in Syria but are now “not willing to risk their reputation to take commercial risks” there, said Mr. Salameh. The banks have subsequently cut their loans in Syria by 60% to around $2 billion and set aside $400 million to cover potential losses, he said.
“By preserving the confidence in the financial sector, and by preserving the stability of the Lebanese pound, we have been able to keep the potential to restart higher growth in tact.”
Mr. Salameh said the central bank has instructed its lenders to respect international sanctions against the Syrian regime. Lebanon and its banks are also complying with international sanctions against Iran, he said. The U.S. Treasury intensified its scrutiny of Beirut’s banking system earlier this year amid concerns it was being used to launder money on behalf of militant group Hezbollah.
“No Lebanese bank will work in a currency or with a bank that is in countries that have issued sanctions,” Mr. Salameh said.
“The Lebanese banks will not work with countries, companies or persons on these sanctions lists. We have been able to demonstrate that internationally and we believe these doubts about what could be done via the Beirut banking sector are now behind us,” he added.
Mr. Salameh was in London to promote plans to revive Beirut’s standing as a financial center as it faces stiff competition from rivals in the wider Middle East region, such as Dubai.
The central bank chief said the city aims to build a capital market focused on start-up enterprises and small businesses. Oil and gas production and associated services will be key sectors targeted, he said. An important part of the plan is to privatize the Beirut stock exchange, which should happen some time in the next two years.
As tensions flare across the Middle East, Mr. Salameh said Lebanon has learned there is little point waiting for periods of relative calm to embark on new ventures.
“Our experience in Lebanon taught us that you have to operate, not to wait until everything is clear and quiet, because you would lose opportunities and lose time. It’s like asking Japan not to do anything until they don’t have earthquakes.”
Annual inflation in Lebanon is expected to be around 6% for 2012, reflecting higher energy prices, Mr. Salameh said. The central bank aims to keep inflation at 4% and Mr. Salameh said officials will drain liquidity from the banking system to hit their target next year if public sector wage increases threaten to keep inflation above target.ebanon’s central bank is preparing a stimulus package to revive growth in an economy hit by armed conflict in neighboring Syria, the country’s central bank governor said.
Riad Salameh said in an interview with Dow Jones Newswires that the Bank of Lebanon is putting the finishing touches to a program aimed at boosting the housing market and spurring construction.
The central bank will finalize the program’s details, including its size, in December, Mr. Salameh said. It is to be launched early next year and will allow banks to tap cheap central bank credit to fund mortgage lending and drive growth. It follows an earlier push to promote extra investment in productive industries and energy.
“We believe once demand is higher in the housing sector it is going to drive all other sectors to better activity,” he said.
Lebanon’s economy expanded 3% in 2011, according to the World Bank, but is tipped to expand just 2% in 2012 due in part to the armed revolt in Syria against President Bashar al-Assad’s regime, a conflict which has hurt activity across the region.
Lebanese banks have had a longstanding presence in Syria but are now “not willing to risk their reputation to take commercial risks” there, said Mr. Salameh. The banks have subsequently cut their loans in Syria by 60% to around $2 billion and set aside $400 million to cover potential losses, he said.
“By preserving the confidence in the financial sector, and by preserving the stability of the Lebanese pound, we have been able to keep the potential to restart higher growth in tact.”
Mr. Salameh said the central bank has instructed its lenders to respect international sanctions against the Syrian regime. Lebanon and its banks are also complying with international sanctions against Iran, he said. The U.S. Treasury intensified its scrutiny of Beirut’s banking system earlier this year amid concerns it was being used to launder money on behalf of militant group Hezbollah.
“No Lebanese bank will work in a currency or with a bank that is in countries that have issued sanctions,” Mr. Salameh said.
“The Lebanese banks will not work with countries, companies or persons on these sanctions lists. We have been able to demonstrate that internationally and we believe these doubts about what could be done via the Beirut banking sector are now behind us,” he added.
Mr. Salameh was in London to promote plans to revive Beirut’s standing as a financial center as it faces stiff competition from rivals in the wider Middle East region, such as Dubai.
The central bank chief said the city aims to build a capital market focused on start-up enterprises and small businesses. Oil and gas production and associated services will be key sectors targeted, he said. An important part of the plan is to privatize the Beirut stock exchange, which should happen some time in the next two years.
As tensions flare across the Middle East, Mr. Salameh said Lebanon has learned there is little point waiting for periods of relative calm to embark on new ventures.
“Our experience in Lebanon taught us that you have to operate, not to wait until everything is clear and quiet, because you would lose opportunities and lose time. It’s like asking Japan not to do anything until they don’t have earthquakes.”
Annual inflation in Lebanon is expected to be around 6% for 2012, reflecting higher energy prices, Mr. Salameh said. The central bank aims to keep inflation at 4% and Mr. Salameh said officials will drain liquidity from the banking system to hit their target next year if public sector wage increases threaten to keep inflation above target.
NASDAQ/ Dow Jones
Leave a Reply
You must be logged in to post a comment.