The BLOM Bank headquarters in Beirut, Friday, Dec. 9, 2011. (The Daily Star/Mahmoud Kheir)
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Freddie Baz, vice-chairman of Bank Audi, Lebanon's biggest bank by assets, says remittances made up about half of Lebanon's financial inflows last year, and a similar share of the $11.5bn recorded in the first nine months of this year.Still, financial inflows have helped Lebanon's banks secure deposits equal to more than three times its GDP, enabling them to buy large amounts of government debt.Last year, the International Monetary Fund warned of Lebanese banks' high exposure to sovereign debt: 28 per cent of assets, it said, were in government debt securities and another 40 per cent in deposits and excess reserves at the central bank.The sectors are comparable, says Mr Azhari: before the latest crisis, 10-year government eurobonds were trading at yields of about 7.5 per cent, while a 10-year loan to the private sector would earn interest of about 8.3 per cent.The actual deficit will be 8.4 per cent of GDP, meaning almost 10 per cent of GDP is going on servicing debt.
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