Torbey: Banks to keep financing state
Oct. 23, 2015 | 12:26 AM
The Daily Star
BEIRUT: The Lebanese government will be compelled to borrow more as long as the budget deficit continues to grow, the head of the Association of Banks in Lebanon said Thursday, expecting the public debt to reach $72 billion at the end of 2015.
“The budget deficit is expected to reach $5.4 billion at the end of this year, representing 10 percent of Lebanon’s GDP, and this deficit will compel the government to borrow more,” Joseph Torbey said during a news conference to announce the launch of the Annual Arab Banking Conference in Beirut on Nov. 19.
He added that the public debt reached $67 billion in 2014 and is expected to reach $72 billion at the end of 2015.
Torbey stressed that the Lebanese banks would continue to finance the needs of the Lebanese state.
“The continuation of this financing will guarantee the continuation of the state with all its institutions and all its branches,” he explained.
Lebanese banks hold the bulk of the state’s Treasury bills and eurobonds along with the Central Bank. The banks are expected to subscribe heavily in the new eurobond issue which will be announced by the Finance Ministry in the coming days.
Local banks are still financing the needs of the state at reasonable interest rates despite the negative outlook the international rating agencies gave to Lebanon.
The recent downgrade has made it difficult for the Lebanese state to tap international markets.
But any new eurobond issue would require the approval of the Lebanese Parliament, an option which is very unlikely in the near future as long as the political stalemate persists.
Torbey also lamented the poor economic performance in Lebanon.
“The economic slowdown and political instability have caused big retreat in commercial and trade activities last year and especially import which fell by 2.3 percent.”
He expected imports to fall by 6.1 percent this year but projected exports to rise by seven percent.
Torbey stressed that Lebanese banks continued to perform well as total assets are expected to reach $186 billion at the end of 2015 while customer deposits would stand at $152 billion. Total banks equity has reached $17.7 billion, total loans to the private sector $48.2 billion and loans to the public sector have reached $38 billion.
Wissam Fattouh, secretary-general of the Union of Arab Banks, said that key international and Arab banking officials and CEOs are expected to participate in the conference in November.
