BEIRUT: Central Bank Governor Riad Salameh predicted modest growth in the profits of Lebanese banks in 2014 despite the difficult political and economic conditions and the growing talk of higher taxes on lenders.
Salameh, speaking during an interview with Al-Mustaqbal newspaper, also hailed the decision of Saudi Arabia to scrap the advisory on its citizens against travel to Lebanon.
“The banking sector was and is still sound. The banks’ assets up to March 2014 have exceeded $166 billion while customer deposits in 2013 have grown by more than 8 percent to reach $143 billion. The reason why the banks did not make higher profits is because we asked them to increase the provisions in the countries with increased risks,” Salameh said.
He added that the banks would either record the same growth in profits or see a slight rise in net earnings, claiming that growth in deposits would not lose momentum.
Salameh stressed that the recent decision by Saudi Arabia to lift its advisory against coming to Lebanon would surely boost tourism and investments in the country, and said he expected more Arab states to follow suit in the near future.
But the governor warned of grave consequences if taxes were increased in this delicate period, reiterating his call to pay the higher salaries for civil servants and public school teachers in installments in order to avoid any repercussion.
Though he declined to make any projections for GDP growth in 2014, he appeared confident that the level of growth this year would be reasonable despite the difficult economic circumstances.
Salameh expressed deep concern over the high debt to GDP ratio, which has risen from 132 percent to 140 percent.
He also voiced his fear that the influx of Syrian refugees would cause further damage to the Lebanese economy if no action was taken.
But Salameh did not object to the idea that the banks’ share in financing the public sector salary scale should increase by canceling the discount of their investments from their total profits.
He added that the Central Bank has developed a series of initiatives to stimulate the economy and encourage spending.
“Our incentives in 2013 have recorded a GDP growth of 2.5 percent despite all the difficult conditions the country has passed through,” Salameh explained.
He reiterated that the economy would remain stable thanks to the measures adopted by the Central Bank, claiming that its policies have protected Lebanon.