BEIRUT: The head of the Association of Banks in Lebanon Wednesday outlined the measures the president of the republic and the new government should take to bail out the economy from its deep slumber. “We want to share with the Lebanese the feeling of satisfaction over the election of President Michel Aoun and the designation of Prime Minister Saad Hariri to form the government,” Joseph Torbey told reporters at the headquarters of ABL in Beirut.
Torbey assured that the Lebanese banks would fully cooperate with the new rule to revive the economy in any possible way.
He reminded that the banking sector has always been keen to finance the needs of the state even in the darkest hours when other forms of finance were not available.
“We continued to finance the needs of the state over two and half years during the presidential vacuum. The state was able to preserve its sovereign functions as well as its economic and social duties thanks to these finances. Our direct financing of the state has exceeded $35 billion,” Torbey said.
The banker was referring to the loans provided to all the successive governments in the form of subscription of Treasury bills and Eurobonds.
Lebanese banks hold a large chunk of the government’s debt and this has increased its exposure to this debt.
Torbey also touched on need to invest in the country’s infrastructure. “The private sector wants the development of the infrastructure and we as a banking sector need a speedy action to expand the networks to serve our economy.
The digital economy by itself can enlarge the size of the national economy and this would attract new investments and create more jobs to the youths,” Torbey said.
He pointed out to the Central Bank’s initiative to finance the startup companies after allocating $400 million for this purpose.
Torbey emphasized that Lebanese banks are willing to finance major infrastructure projects with the help of international financial institutions such as the World Bank and IFC.
“We as banks underline the need to achieve higher GDP growth and we have a role in this task. Banks have the capabilities and expertise once the political, economic and legislation stability has been achieved.”
Torbey said that banks have wide and solid relations with the business community abroad.
He expressed hope that the new rule would expand the size of the economy because it is the prelude for absorbing the public debt.
“No country can sustain high public debt to GDP. The debt to GDP should be lowered to at least 120 percent from the current 144 percent. We should remember that debt to GDP was 186 percent in 2006 but retreated to less than 130 percent thanks to growth and the assistance of the donor states. We also see a chance to raise the GDP growth to 5 percent from the current 1 percent,” Torbey said.
He added that the business community will make the necessary investments to achieve a higher GDP growth in Lebanon.
Torbey warned officials not to count on the monetary policy, adding that the Central Bank and commercial banks have given the country ample time although at a higher cost to preserve the monetary stability.
He said that the time is not ripe to slap new taxes amid an economic slowdown.
A version of this article appeared in the print edition of The Daily Star on November 17, 2016, on page 4.
