As world economies tumble, Lebanon boasts benefits (Feature)

By Weedah Hamzah Nov 20, 2008, 13:07 GMT

Beirut - Lebanese banks have managed not only to survive the effects of the global economic crisis, but the country has even registered gains in its banking sector.

The head of research at Byblos Bank Group, one of Lebanon's biggest banks, Nassib Ghobriel, believes that the country's solid banks present 'an attractive alternative to depositors lacking confidence in other international institutions during the financial crisis.'

'We have not experienced an outflow of deposits from the banking sector,' he said. On the contrary, 'there is evidence that some individuals have transferred their funds from their western banks into Lebanese banks because of their high level of confidence in the sector,' Ghobriel told Deutsche Presse-Agentur dpa.

Ghobriel added that the Lebanese banks have not been affected by the global financial crisis, due to a tightly regulated banking sector and an aversion to risk.

'Lebanon was never a safe haven for depositors to bring their savings from aboard, due to the political turmoil that has hit the country in the past few years, but today it is becoming a haven because we have seen a lot of big names worldwide shaken during the crisis,' Ghobriel said.

Former finance minister Jihad Azour told dpa that unlike European and US financial institutions, Lebanese banks have deposits that amount to three times the volume of loans granted.

'There are signs of confidence, and the Lebanese banking sector has proven to be resilient,' Azour said.

Azour added that there are some areas where the Lebanese economy would benefit from what is happening in the global financial markets, since oil prices have declined by more than 50 per cent.

'Lebanon is not an importer of energy products. Its import bill will decline and therefore its trade deficit will be reduced. Secondly, the weakening of the euro and the strengthening of the dollar in the currency markets will also help, along with the decline in commodity prices, global oil prices and global food prices,' he said.

'These factors will help of course to reduce the trade deficit and will help reduce the pressure on public finances,' he added.

He stressed that above all, over the medium to long term 'it will help reduce inflation pressure in the country, which has reached 12 per cent this year.'

Economists in Lebanon believe that, while the rest of the world could be grappling with a global recession, Lebanon could eventually lighten its debt burden and face an optimistic future.

The country's massive public debt, which amounts to 44 billion dollars, is one of the main strains on Lebanon's economy. Much of the debt is a result of the costs of reconstruction from the 1975-90 civil war.