BEIRUT: Central Bank governor Riad Salameh said Tuesday that Lebanon successfully raised LL700 billion ($466.6 million) from the sale of eight- and 10-year Treasury bills. “This money is sufficient to meet the needs of the public sectors and also sufficient to assure the markets that financing and refinancing operations are still continuing,” Salameh told participants at a conference entitled Balancing Opportunities and Risks: Lebanon, MENA and Beyond, which was held the Four Seasons Hotel in Beirut.
Sources said that most of the new issue was snapped up by the commercial banks and the Central Bank.
The yields and return on the new bonds are similar to the current rates, the governor said.
The sources say that Lebanon will have no further need this year to tap markets to finance the public debt or secure money for the public sectors.
However, these sources warned that if Parliament approved the salary scale this summer the Finance Ministry then may be compelled to issue new bonds and this would cause the public debt to swell to alarming levels.
According to caretaker Finance Minister Mohammad Safadi, the cost of the salary increase for public sector will cost around $1.5 billion in the first year.
Salameh urged politicians to cast aside their differences and speed up the formation of the Cabinet to alleviate the pressure on the Central Bank, which is now the main financer of the public sector.
But Salameh reiterated that the monetary situation and the Lebanese pounds were still stable due to the $37 billion gross foreign currency reserves held by the Central Bank.
He projected Lebanon’s GDP to grow 2.5 percent by the end of 2013 while inflation will stand at 3 percent.
However, the governor warned that inflation could exceed 3 percent if the salary scale was ratified.
He added that the Lebanese commercial banks were capable of providing lines of credit close to $20 billion.
“Given these facts, the banks can help finance the Lebanese economy if the political and security situation in the country become more stable,” Salameh said.