Salameh: Lebanese pound, banks safe amid Syria crisis


salameh riad  def-Lebanese Central Bank Governor Riad Salameh comments on the outlook for Syrian banks and economy. He spoke in a Feb. 16 interview from his Beirut office with Bloomberg’s reporter Donna Abu-Nasr.

On the stimulus package:

The plan “has been well received by the market” and banks “have good demand.”

“The purpose was to give a boost to growth,” and may contribute as much as 2 to 3 percentage points to GDP growth this year.

“We are aiming at keeping the growth in credit at around 10 percent. The banks should have a better year than in 2012 because they will not be needing to create general provisions like what they did in 2012.”

On Syria:

“The exposure of the Lebanese banks to the Syrian economy, whether they are operating from Syria or credits given by banks in Lebanon, this exposure has decreased by 60 percent and therefore their exposure on the Syrian economy is much less and doesn’t warrant really special measures any more. The general provisions constituted by banks last year amounted to between $400 and $450 million.”

“The situation is now under control and we do not expect any negative surprises from the situation in Syria on the banks. They are not planning to pull out but they have scaled down their operations and they are in a wait and see situation. They are are aware of the commercial risks and they are respecting the sanctions.”

On inflation:

It was “6 percent last year. This year we are aiming at bringing it down to 4 percent.”

On the Lebanese pound:

“The Lebanese pound is stable. We have seen offerings of dollars during the first 45 days of this year. The central bank was a net buyer of dollars in the market and interest rates are stable in the country.”

On economic growth:

“Real growth in the economy in 2012 was around 2 percent.”

Given the environment in the Arab world and Syria “one could not expect to have better than this.”

On decline in Gulf tourists:

“Their absence has been felt, especially in the hotel sector. That’s the reason why we have to increase the internal demand. And that’s the reason why we did the stimulus package to make up for this gap.”

On Lebanon’s ability to deal with continuing tensions in Syria:

“As long as we can keep the political and security situation under control, I think what we have lived in 2012 and the correction that happened have given a certain base to our economy from which we can rebuild again.”

“We are today better equipped to face pressures or tensions than we were before because we have more resources and the markets have confidence in the banking sector and the central bank.”

“‘You can see it in the levels of interest rates where for a country rated B the markets are lending at much lower rates than other countries having the same rating.’’