BEIRUT: Banks deposits in Lebanon grew by 24 percent to exceed $103 billion in January 2010 and $105 billion in March of the same year, said Makram Bou Nassar, acting deputy director at the Foreign Affairs Department in the Central Bank of Lebanon on Wednesday.
“These numbers proved that our policies at the Central Bank are successful,” he said.
He added that credit services in Lebanon, unlike other countries, were increasing and their value exceeded $30 billion at the end of January 2010 growing by 17 percent annually. “The tendency that prevailed in most of the other countries was the contraction of credit,” he said.
Nassar’s remarks came during a lecture organized by the Faculty of Agricultural and Food Sciences at the American University of Beirut in the framework of the faculty’s entrepreneurship agribusiness seminars.
The aim of the lecture was to give an insight into the measures taken by the Central Bank of Lebanon to encourage lending and provide some recent statistics of the Lebanese financial system.
Nassar said the dollarization of bank deposits declined from 77 percent in early 2008 to less than 64 percent by the end of January 2010. “Investors and depositors are changing their deposits into Lebanese currency not just because they are getting paid higher returns, but because they believe that the currency is fixed and stable and that the policy of the Central Bank is sound,” he said.
He said that the foreign assets including gold amount to $40 billion. “These foreign assets cover more than 21 months of imports and they satisfy the demand for foreign currency,” he said.
He added that the economic growth reached 8.5 percent in 2008 and 9 percent in 2009. “We expect good growth rates to continue in 2010. However, we still don’t have accurate numbers but It is probably more than 5 percent,” he said.
Nassar said that the inflation rate stood at around 3 percent in 2009 compared to 10 percent in 2008. “We had low inflation rates in the past year and we expect inflation to be below 4 percent in 2010 as well.”
Regarding the measures adopted by the Central Bank to encourage lending, Nassar said that it was focusing on stimulating investments over the last few years to productive sectors and it recently issued new circulars that aimed at encouraging lending in Lebanese pounds at a lower cost.
He said that the Central Bank reduced the regulatory reserves imposed on commercial banks for loans that are given to specific sectors. “This will reduce the cost of the loans and the banks will reduce the interest rates,” he said. “The purpose of this strategy is to encourage investments and to ensure that small and medium enterprises have financing.”
Nassar added that since these circulars were issued in 2009, a credit increase of around $800 million to $1 billion was witnessed in Lebanon.
Nassar underlined the important role that the Central Bank plays in regulating the banking sector, safeguarding the Lebanese currency as well as the economic stability and encouraging competition in the banking sector.
“Competition is very important,” he said. “Only mergers between big banks and small or weak ones are allowed.”