IFP Info - News
  • Agrofood
    • All
    • Agriculture
    • Environment
    • Food

    Food Africa and pacprocess MEA attract over 25,000 trade visitors to the trade fair duo in Egypt

    Pacts worth over OMR 33 million signed to establish agricultural, fisheries projects

    Pacts worth over OMR 33 million signed to establish agricultural, fisheries projects

    Egypt’s food industries contribute 24.5% of GDP

    Egypt’s food industries contribute 24.5% of GDP

    $36mln contract for construction of Duqm fisheries complex

    $36mln contract for construction of Duqm fisheries complex

    Ministry signs agreement to support Oman’s honey industry

    Ministry signs agreement to support Oman’s honey industry

    Local, Italian companies partner up to establish food retail chain in Egypt

    Local, Italian companies partner up to establish food retail chain in Egypt

    Trending Tags

    • Business & Economy
      • All
      • Business
      • Economy
      • Finance
      • Industry
      • Technology
      • Trade
      • Transport & Logistics

      Food Africa and pacprocess MEA attract over 25,000 trade visitors to the trade fair duo in Egypt

      Egypt’s food industries contribute 24.5% of GDP

      Egypt’s food industries contribute 24.5% of GDP

      Profits at top Saudi banks jump 17.6% in Q1

      Profits at top Saudi banks jump 17.6% in Q1

      GCC can create 600,000 tech jobs and add US$255 billion to GDP by 2030

      GCC can create 600,000 tech jobs and add US$255 billion to GDP by 2030

      What will Qatar do with its World Cup infrastructure after FIFA 2022 ends?

      What will Qatar do with its World Cup infrastructure after FIFA 2022 ends?

      New study reveals that UAE is most competitive economy in the Arab world

      New study reveals that UAE is most competitive economy in the Arab world

      Trending Tags

      • CES 2017
      • Election Results
      • eSports
    • Construction
      • All
      • Infrastructure
      • Real Estate
      Oman Construction Equipment Industry to 2028

      Oman Construction Equipment Industry to 2028

      $36mln contract for construction of Duqm fisheries complex

      $36mln contract for construction of Duqm fisheries complex

      What will Qatar do with its World Cup infrastructure after FIFA 2022 ends?

      What will Qatar do with its World Cup infrastructure after FIFA 2022 ends?

      Madayn working on major Oman industrial city projects

      Madayn working on major Oman industrial city projects

      Foundation stone laid for new 700-bed hospital is Salalah, Oman

      Foundation stone laid for new 700-bed hospital is Salalah, Oman

      Iraq set to award new Faw Port deals

      Iraq set to award new Faw Port deals

      Trending Tags

      • Energy
        • All
        • Oil & Gas
        • Power & Electricity
        • Renewable Energy
        Suez Canal expects US$3.5 billion in revenues in H1

        Suez Canal expects US$3.5 billion in revenues in H1

        UAE and Egypt’s consortium to buy African renewables firm Lekela Power

        UAE and Egypt’s consortium to buy African renewables firm Lekela Power

        Fitch revises Saudi Aramco’s outlook to positive from stable

        Fitch revises Saudi Aramco’s outlook to positive from stable

        Investments in renewables in Egypt reach LE6 bn: Official

        Investments in renewables in Egypt reach LE6 bn: Official

        Egypt signs 8 gas exploration contracts worth $934mn over 15 months

        Egypt signs 8 gas exploration contracts worth $934mn over 15 months

        JGC lands $3.7bn Iraq refinery upgradation project deal

        JGC lands $3.7bn Iraq refinery upgradation project deal

        Trending Tags

        • Hospitality

          Food Africa and pacprocess MEA attract over 25,000 trade visitors to the trade fair duo in Egypt

          Qatar has ‘solid’ line-up of infrastructure, hospitality projects to prepare for large influx of visitors in 2022: OBG

          Qatar has ‘solid’ line-up of infrastructure, hospitality projects to prepare for large influx of visitors in 2022: OBG

          Saudi to be among world’s big leisure tourism hubs by 2030

          Saudi to be among world’s big leisure tourism hubs by 2030

          Qatar’s hospitality sector peaks despite turbulent 2020

          Qatar’s hospitality sector peaks despite turbulent 2020

          Accor inks deal to manage first Swissôtel-branded hotel and residential project in Qatar

          Accor inks deal to manage first Swissôtel-branded hotel and residential project in Qatar

          Staycations to stimulate Qatar’s hospitality sector

          Staycations to stimulate Qatar’s hospitality sector

        • IFP Events
          • Event News
          • Upcoming Events
        • العربية
        No Result
        View All Result
        • Agrofood
          • All
          • Agriculture
          • Environment
          • Food

          Food Africa and pacprocess MEA attract over 25,000 trade visitors to the trade fair duo in Egypt

          Pacts worth over OMR 33 million signed to establish agricultural, fisheries projects

          Pacts worth over OMR 33 million signed to establish agricultural, fisheries projects

          Egypt’s food industries contribute 24.5% of GDP

          Egypt’s food industries contribute 24.5% of GDP

          $36mln contract for construction of Duqm fisheries complex

          $36mln contract for construction of Duqm fisheries complex

          Ministry signs agreement to support Oman’s honey industry

          Ministry signs agreement to support Oman’s honey industry

          Local, Italian companies partner up to establish food retail chain in Egypt

          Local, Italian companies partner up to establish food retail chain in Egypt

          Trending Tags

          • Business & Economy
            • All
            • Business
            • Economy
            • Finance
            • Industry
            • Technology
            • Trade
            • Transport & Logistics

            Food Africa and pacprocess MEA attract over 25,000 trade visitors to the trade fair duo in Egypt

            Egypt’s food industries contribute 24.5% of GDP

            Egypt’s food industries contribute 24.5% of GDP

            Profits at top Saudi banks jump 17.6% in Q1

            Profits at top Saudi banks jump 17.6% in Q1

            GCC can create 600,000 tech jobs and add US$255 billion to GDP by 2030

            GCC can create 600,000 tech jobs and add US$255 billion to GDP by 2030

            What will Qatar do with its World Cup infrastructure after FIFA 2022 ends?

            What will Qatar do with its World Cup infrastructure after FIFA 2022 ends?

            New study reveals that UAE is most competitive economy in the Arab world

            New study reveals that UAE is most competitive economy in the Arab world

            Trending Tags

            • CES 2017
            • Election Results
            • eSports
          • Construction
            • All
            • Infrastructure
            • Real Estate
            Oman Construction Equipment Industry to 2028

            Oman Construction Equipment Industry to 2028

            $36mln contract for construction of Duqm fisheries complex

            $36mln contract for construction of Duqm fisheries complex

            What will Qatar do with its World Cup infrastructure after FIFA 2022 ends?

            What will Qatar do with its World Cup infrastructure after FIFA 2022 ends?

            Madayn working on major Oman industrial city projects

            Madayn working on major Oman industrial city projects

            Foundation stone laid for new 700-bed hospital is Salalah, Oman

            Foundation stone laid for new 700-bed hospital is Salalah, Oman

            Iraq set to award new Faw Port deals

            Iraq set to award new Faw Port deals

            Trending Tags

            • Energy
              • All
              • Oil & Gas
              • Power & Electricity
              • Renewable Energy
              Suez Canal expects US$3.5 billion in revenues in H1

              Suez Canal expects US$3.5 billion in revenues in H1

              UAE and Egypt’s consortium to buy African renewables firm Lekela Power

              UAE and Egypt’s consortium to buy African renewables firm Lekela Power

              Fitch revises Saudi Aramco’s outlook to positive from stable

              Fitch revises Saudi Aramco’s outlook to positive from stable

              Investments in renewables in Egypt reach LE6 bn: Official

              Investments in renewables in Egypt reach LE6 bn: Official

              Egypt signs 8 gas exploration contracts worth $934mn over 15 months

              Egypt signs 8 gas exploration contracts worth $934mn over 15 months

              JGC lands $3.7bn Iraq refinery upgradation project deal

              JGC lands $3.7bn Iraq refinery upgradation project deal

              Trending Tags

              • Hospitality

                Food Africa and pacprocess MEA attract over 25,000 trade visitors to the trade fair duo in Egypt

                Qatar has ‘solid’ line-up of infrastructure, hospitality projects to prepare for large influx of visitors in 2022: OBG

                Qatar has ‘solid’ line-up of infrastructure, hospitality projects to prepare for large influx of visitors in 2022: OBG

                Saudi to be among world’s big leisure tourism hubs by 2030

                Saudi to be among world’s big leisure tourism hubs by 2030

                Qatar’s hospitality sector peaks despite turbulent 2020

                Qatar’s hospitality sector peaks despite turbulent 2020

                Accor inks deal to manage first Swissôtel-branded hotel and residential project in Qatar

                Accor inks deal to manage first Swissôtel-branded hotel and residential project in Qatar

                Staycations to stimulate Qatar’s hospitality sector

                Staycations to stimulate Qatar’s hospitality sector

              • IFP Events
                • Event News
                • Upcoming Events
              • العربية
              No Result
              View All Result
              IFP Info - News
              No Result
              View All Result

              Lebanon defies odds to keep its finances afloat

              Financial Times

              June 20, 2017
              in Uncategorized
              0
              0
              SHARES
              14
              VIEWS
              Share on FacebookShare on Twitter

              Lebanon’s government is laboring under a debt pile equivalent to 147 per cent of the country’s gross domestic product, rendering it the third most indebted public sector in the world, after Japan and Greece. The IMF estimates this will climb to 165 per cent by 2022, overtaking the economic basket case that is the Hellenic Republic in the debt stakes. Servicing this debt now soaks up half of government revenues, up from 38.5 per cent in 2014. A current account deficit of 15.9 per cent of GDP, among the highest in the world, means the Middle Eastern country is dangerously dependent on attracting capital inflows to pay its way in the world.
              Lebanon’s weak economic growth, just 1 per cent in 2016, according to the IMF’s estimates, hardly seems an obvious draw for this much-needed foreign money. Moreover, the country is located in one of the world’s most dangerous neighborhoods.
              Yet Lebanon has never defaulted on its debt in its history and its foreign currency-denominated debt trades at a blended yield of 6.22 per cent, little more than the Middle Eastern average of 5.84 per cent, suggesting few are worried about repayment.
              “Lebanon emerges as a prime suspect for facing a debt crisis based on its weak solvency metrics. Standard debt-sustainability models, derived rules of thumb and other countries’ experience suggest that these are early signs of a debt crisis,” says Carla Slim, Middle East and North Africa economist at Standard Chartered, who is herself Lebanese.
              “To add to the concerns, both short and medium-term fiscal planning is non-existent given the lack of a medium-term plan to ensure debt sustainability and parliament’s failure to endorse a budget since 2005.”
              Gabriel Sterne, head of global macro research at Oxford Economics, a consultancy, adds: “If you look at spreads versus any debt measure, Lebanon is too tight. You are not getting paid enough.”
              Yet fears of an impending debt crisis are nothing new for Lebanon, with the country of 6.2m long having successfully juggled seemingly implausible debt metrics. Indeed, its debt/GDP ratio was once markedly higher still, reaching a peak of 185 per cent in 2006.
              “When I was at the IMF from 2004-06 working on crisis resolution, the one country that the IMF staff really wanted to work on then was Lebanon,” says Mr Sterne.
              “It was the crisis that was going to happen. It had huge debt, really difficult politics and there were concerns that the central bank might be going bust,” because of circular lending, with “the central bank, government and commercial banks all lending to each other”.
              “But a colleague came back and said there is never going to be a crisis. The banks will carry on lending to the government because if one goes down they all go down.”
              Ms Slim adds that “Lebanon’s debt has long been dubbed unsustainable”. The key question is whether this is about to change.
              Lebanon’s finances have long been propped up by its large and reasonably successful diaspora, estimated by StanChart to number anywhere between 5m and 16m, who happily remit money back to Lebanese banks.
              These inflows are supported by the pegging of the Lebanese pound to the US dollar, deposit rates of around 3.5 per cent for dollars and 5 per cent-plus for pounds, the prospect of an eventual return to Lebanon, particularly for those living in Gulf states where naturalization is not possible, and the fact that “the banking system in general in Lebanon has a fairly good reputation”, in the words of Ms Slim.
              “They have such a loyal diaspora of wealthy people around the region who keep their money in the banks,” says Mr Sterne. “During the global financial crisis banks were going bust elsewhere, and we also had a war in Lebanon [in 2006], but Lebanon sailed through all of that. It’s a fascinating case.”
              These inflows not only cover the current account deficit but also provide the funds for the commercial banks to buy government debt, keeping the system afloat.
              This “virtuous cycle” wobbled last year, however. Growth in non-resident deposits fell to a decade low of less than 3 per cent in the second quarter of 2016, from 10 per cent-plus in the same period a year earlier, says Ms Slim, leading to a 10 per cent fall in foreign exchange reserves to $35bn as assets were sold to cover the current account deficit.
              Ms Slim attributes this slump to lower oil prices, which may have hit the fortunes of many Lebanese working in the Gulf and African oil exporters, as well as “low confidence” in Lebanon itself due to “overall policy paralysis”, weak growth, the hosting of the Syrian refugees and a 29-month presidential vacuum, which finally ended in October 2016.
              The Banque du Liban, the central bank, reacted by issuing about $12bn of dollar-denominated eurobonds that it sold to the commercial banks, replenishing its FX reserves.
              This drained commercial banks’ foreign currency liquidity, which they plugged either by sourcing funds from their correspondent banks abroad or by upping their deposit rates to attract more foreign deposits. “Some tried to attract existing private bank clients with money in Switzerland or elsewhere by offering them high deposit rates,” says Ms Slim. This seems to have worked. As of April, the most recent month for which figures are available, deposit growth is back to 7 per cent, year on year.
              Given the appointment of President Michel Aoun in October and a national unity government two months later, Ms Slim believes it is unlikely the country will face another political impasse that saps depositors’ confidence, in the near-term at least, even if parliament remains suspended. Even if that was to happen, she is confident another eurobond issue would work, even if the obvious alternative, a rise in interest rates, remains difficult given the already weak economy.
              Nevertheless, given the possibility of an extended period of depressed oil prices and below-trend growth in the Middle East, deposit flows may remain weak by historical standards.
              Longer term, Ms Slim believes the only solution to Lebanon’s financial problems is medium-term planning and budgeting to bring the government’s finances under control.
              Mr Sterne believes that as long as Lebanon can generate economic growth of, say, 4 per cent it is “probably going to be all right” as its debt/GDP ratio will probably remain stable or even fall. This could be touch and go, though, with growth currently “pitiful” and the IMF forecasting an expansion of just 2 per cent this year and longer-term growth of 3 per cent.
              Nevertheless, Mr Sterne warns: “People who call a crisis in Lebanon have been wrong until now but one day something might come along and knock it over. We are still only one shock away from something nasty happening. It’s the sovereign crisis that is inevitable.”
              Ms Slim adds: “If one piece of the system goes, the whole system goes. If they lose these deposits then everything falls apart.”
              Financial Times

              Previous Post

              GE signs $575 million railway contract with Egypt

              Next Post

              Qatar continues building as alternative trade routes are opened up for construction supplies

              Next Post

              Qatar continues building as alternative trade routes are opened up for construction supplies

              News Letter

              Subscribe to our mailing list to receive daily updates direct to your inbox!

              *we hate spam as much as you do

              Filter By Country

              IFP Info – News

              The latest Middle East Business News & Events brought to you on a daily basis from multiple credible news portals around the world

              Follow Us

              Categories

              • Agrofood
              • Business & Economy
              • Construction
              • Covid-19 Updates
              • Energy
              • Event News
              • Hospitality
              • Interviews

              Countries

              • Bahrain
              • Egypt
              • Iran
              • Iraq
              • Jordan
              • Kingdom of Saudi Arabia
              • Kuwait
              • Lebanon
              • Oman
              • Other Africa
              • Other GCC
              • Other Middle East
              • Qatar
              • Syria
              • United Arab Emirates
              • Worldwide

              Newsletter

              Subscribe to our mailing list to receive daily updates direct to your inbox!

              *we hate spam as much as you do

              • About
              • Advertise
              • Privacy & Policy
              • Contact

              © 2023 IFP Group - All Rights Reserved / www.ifpexpo.com

              No Result
              View All Result
              • Agrofood
              • Business & Economy
              • Construction
              • Energy
              • Hospitality
              • IFP Events
                • Event News
                • Upcoming Events
              • العربية

              © 2023 IFP Group - All Rights Reserved / www.ifpexpo.com