Salameh: Lebanon endured financial crisis

TOKYO: Central Bank Governor Riad Salameh said Lebanon’s economy has shown remarkable resilience to severe shocks, thanks to a credible monetary policy, a stable currency, prudent banking practices, including the separation between retail and investment banks, and sound public debt management.

Speaking at the 67th Plenary of Boards of Governors of the International Monetary Fund and World Bank group in Tokyo, the governor also touched on the security situation in the Middle East.

“The Middle East is experiencing historic changes, and I can attest to the continuing challenges facing our peoples. This past year, the IMF has agreed to provide financing commitments to three of our countries, one of which is under the Precautionary and Liquidity Line – the first of its kind. Negotiations with another country are currently under way,” Salameh added.

He said that in these trying times, it becomes even more urgent for everyone in the Middle East to learn from one another’s experience and share knowledge in the quest for better solutions.

The governor added that the Bank Group this past year disbursed over $5 billion to build schools, reform key sectors such as electricity, and create and develop small and medium enterprises.

Salameh also stressed that advanced economies continue to face the formidable task of addressing fiscal challenges, reforming the financial sector and reviving growth.

“In particular, risks emanating from fiscal uncertainties in the United States and ongoing concerns on the European sovereign debt crisis call for decisive and timely actions to avoid damaging effects on global stability and growth,” he said.

“The urgency of resolving the euro-area crisis cannot be overemphasized. Euro-area members must persevere in efforts to stabilize the sovereign debt market, and implement the necessary structural reforms to revive growth,” he told participants at the conference.

Salameh noted that since the onset of the crisis in 2008, the IMF has made 126 new financing commitments, totaling $540 billion.

“Given prolonged uncertainties, participants in the New Arrangements to Borrow have agreed to activate the arrangements for the full amount for another six-month period.

“The membership has also committed to increasing the Fund’s resources by $456 billion through bilateral borrowing arrangements.

“These additional resources will bring the Fund’s lending power to a total of $1 trillion, thereby strengthening the global safety net for members,” Salameh said.

He also hailed the role of the private sector in stimulating the economy and create jobs.

“As the Bank’s World Development Report on Jobs recognizes, the private sector creates most jobs, with the support of sound government policies. Jobs that are good for development can be transformative for countries of all income levels. Good jobs contribute to better living standards, higher productivity and stronger social cohesion,” the governor said.

He added that jobs are at the core of development, helping fragile societies reject violence, giving dignity to the poorest, and offering youth hope for a better future.

“Last year’s World Development Report argued convincingly that gender economics is smart economics, and we must ensure that women take their rightful place in employment and development,” Salameh said.

He highlighted that the IMF and the Bank Group have continued to engage with low-income countries.

“Since the beginning of the crisis, more than half of the Fund’s financing arrangements have been with low-income countries,” he said.

“Following the review of the Fund’s low-income country facilities, the IMF board has decided to use the Fund’s remaining gold sales windfall profits as part of a strategy to ensure the sustainability of the Poverty Reduction and Growth Trust. We must all firmly support this initiative,” the governor suggested.

A version of this article appeared in the print edition of The Daily Star on October 13, 2012, on page 4.




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