BEIRUT: Lebanese banks deposited $7 billion at the Central Bank in 2015 to boost foreign currency reserves, the head of the Association of Banks in Lebanon Joseph Torbey announced Thursday.
“We have deposited around $7 billion at the Central Bank, which will strengthen its reserves especially in foreign currency and could reflect positively in the monetary market. This increase in investments which totaled $10.3 billion last year has been financed through the growth of deposits of around $7 billion and increase in capital by close to $1 billion and we have kept our foreign investments at the $24 billion level,” Torbey told reporters during a news conference following a meeting of the ABL directors to discuss and approve the 2015 annual report of the association.
Lebanese banks played a crucial and vital role in beefing up the foreign currency reserves of the Central Bank, allowing monetary authorities more leverage to overcome crises in the country.
Despite the slow economic growth over the past few years which ranged between 0 percent to less than 2 percent, Lebanon did not experience any monetary crisis or a rush to switch Lebanese pound deposits to the U.S. dollar.
Torbey stressed that Lebanon’s GDP growth was around 1 percent in 2015 due to several developments such as the presidential vacuum, paralysis in the executive and legislative authorities and events taking place in Syria.
“These developments have reflected negatively on internal and external investments as well as consumption,” he explained.
However, Torbey noted that bank loans and remittances from abroad continued despite a slight drop and slow growth.
He added that inflows of cash and bank loans are among the main factors that helped buttress the Lebanese economy.
Torbey also focused on the state of public finance.
“The public finance retreated in 2015 compared to 2014. This public deficit has reached 7.8 percent of the GDP while the primary surplus fell from 2.6 percent of the GDP in 2014 to 1.4 percent in 2015,” he said.
According to Torbey, this caused public debt at the end of 2015 to increase by 7.3 billion, translating to a debt-to-GDP of 138 percent compared to 134 percent in 2014.
Torbey shed light on the contribution of the Lebanese banks in beefing up the Central Bank’s foreign currency reserves and shoring up the Lebanese economy thanks to loans to the private sector.
He added that bank loans to the private sector in 2015 increased by 6.5 percent to reach $3.3 billion, arguing that the cost of financing the national economy was low compared to other countries with similar credit rankings.
Torbey said that total bank loans to both the private and public sectors at the end of 2015 reached $86 billion, 44 percent to the public sector and 56 percent to the private.
He also highlighted the efforts of the Central Bank and commercial banks to meet all the requirements of Basel III.
Torbey said that the capital-adequacy ratio in Lebanon has exceeded the international average, reaching 15.1 percent at the end of 2015.
He also renewed the banks’ full commitment to all international resolutions in terms of international sanctions and FATCA, the U.S. law on foreign financial tax disclosures.
The head of ABL reiterated calls to elect a president to organize Lebanon’s politics and the work of constitutional institutions.
In response to a question about the U.S. financial sanctions on Hezbollah, Torbey said that this issue is now being handled by the Central Bank Gov. Riad Salameh.
The heated debate over these sanctions has simmered down in the past few days following Salameh’s intervention.
