Lebanese Ministry of Information
Central Bank Gov. Riad Salameh Tuesday reassured the public that Lebanon’s national currency is still stable thanks to the monetary policy the bank has pursued. “The Lebanese pound is stable and will remain so. In June 2017, Banque du Liban has consolidated its foreign-currency reserves. This confirms that the Central Bank has the means, as it always declares, to achieve the stability of the national currency. The Lebanese pound’s stable exchange rate strengthens confidence in the economy, reinforces purchasing power and contributes to the stability of the interest rate structure,” Salameh told participants at a conference on SMEs at BIEL.
The governor also touched on interest rates and compared them to other countries in the region. “Interest rates in Lebanon are stable. Banque du Liban intervenes to maintain this stability, with a view to preserving Lebanon’s capacity to attract funds and keep pace with interest rates’ regional and global evolution. BDL management has enabled Lebanon to maintain reasonable interest rates ranging between 6 and 7 percent, compared with 12 percent in Turkey and 20 percent in Egypt, two countries with a considerable size and economy,” Salameh said.
He added that interest rates, which are low compared to Lebanon’s rating, confer a competitive advantage to productive sectors that counterbalances in some ways the costs of deteriorating infrastructure, declining public services and complicated administrative procedures.
“Banque du Liban was keen to reinforce banks’ capitalization in a way to enable these institutions to pursue their lending activities. In fact, according to international banking regulations, the lending limit of a bank is closely correlated to its capital,” he explained.
Salameh reiterated that Lebanese banks’ capital-adequacy ratios are reasonably high by international standards. “Lebanese banks’ capital-adequacy ratios will reach 15 percent, in conformity with Basel III. These banks will also abide by international accounting standards, knowing that they already have the relevant financial means,” he added.
The governor gave credit to the various departments and agencies under the umbrella of the Central Bank. “Banque du Liban, the Banking Control Commission and the Special Investigation Commission will spare no efforts to ensure the strict implementation of the Lebanese laws against money laundering and tax evasion, as well as those promoting good governance and transparency in the financial sector’s management. Today, according to international bodies and organizations, Lebanon is fully compliant,” he said.
Salameh renewed his pledge to provide assistance to the private sector. “BDL will continue to support economic sectors through banks, as authorized by the Code of Money and Credit. During the past five years, it has designed stimulus packages that amounted to $5 billion and have benefited productive sectors – 35 percent – and the housing sector – 65 percent,” he added.
The governor said these incentives, together with the exemption of banks from reserve requirements and government loan subsidies, have led to the injection of almost $14 billion to support economic activity.
“The painful events in our region and the war in Syria have adversely affected economic growth in Lebanon, which was also negatively impacted by the economic and financial difficulties in the countries where the Lebanese work. Subsidized loans have helped maintain positive growth in Lebanon, as a result of their effect on local demand,” Salameh said.
