BEIRUT: The new Cabinet must adopt quick and effective reforms immediately after its formation in order to change the negative political atmosphere in the country, the head of the Association of Banks in Lebanon said Tuesday.
“This will be a transitional Cabinet to pave the way for the election of a new president of the republic. However, this government must take drastic measures if it wants to change the political atmosphere in Lebanon. We need action instead of words,” François Bassil told The Daily Star.
Bassil’s remarks came as the March 8 and March 14 coalitions showed greater flexibility about the composition of the new Cabinet.
President Michel Sleiman said a new Cabinet could be formed within a week if everything goes as planned.
“This Cabinet must take decisions concerning security and economic matters. The [current] caretaker Cabinet is unable to do anything and some of the ministers behave without any accountability,” Bassil stressed.
Sleiman also underlined the need to include all the main parties in addition to some independents in a new government.
“It is important to include all major parties to this Cabinet but on condition that all the factions refrain from any involvement in the Syrian conflict,” he said, in a clear reference to Hezbollah’s role in the Syrian war.
Bassil reiterated the banking sector’s willingness to use its private equity to finance some of the vital electricity and water projects to ease the pressure on the Treasury.
“We can provide loans to the private firms ready to build electricity and water plants. The private sector must be involved in future projects,” he added.
The Central Bank prohibits commercial banks from using customer deposits to finance government projects but will allow these lenders to use some of their private equity for such purposes.
None of the past Cabinets have allowed the private sector to get involved in any infrastructure projects, although several consecutive ministerial statements underlined the need for public-private partnership.
Bassil also said it was imperative to fill all the vacancies in key administrative state positions so they could carry out badly needed reforms.
“The Cabinet has to seriously deal with the rampant misappropriation of funds. To achieve this we must appoint qualified individuals in the vacant positions.”
Bassil also warned that failure to make progress on the political and security fronts could see the banking sector’s profits dwindle this year.
“If the political and security situation in the country does not change drastically this year then the profits of the banking sector could fall compared to 2013,” he cautioned.
Most leading local banks have seen their profits in the first nine months of 2014 either rise slightly or register flat net earnings.
The robust banking sector, which is considered the main pillar of the Lebanese economy, has managed to weather the political and security storms since the Syrian conflict erupted nearly three years ago.
According to Central Bank Governor Riad Salameh, the banking sector is expected to achieve growth of 6-7 percent in 2013. Salameh even showed confidence that the profits of lenders would remain unchanged.
Bassil also commented on the exit of foreign banks from Lebanon.
“I am not surprised by this trend. Most foreign banks can’t compete with the well-established Lebanese banks. The first four banks in the country control 70 percent of the market share,” he added.
Bassil explained that some of the foreign-owned banks were leaving not only Lebanon but other emerging markets as well.
A number of Lebanese banks are negotiating to acquire the retail businesses of both Standard Chartered and Ahli International Bank.