Prime Minister Najib Mikati said Lebanon’s real GDP growth exceeded 5 percent in 2011 and is continuing to increase in 2012, despite regional unrest, and called for a national effort to protect the country from current challenges. “We are pleased to note that preliminary estimates for the growth of our real GDP for the year 2011, according to national estimates, exceed 5 percent in light of the significant improvement of activity following a freeze in the first months of the year,” Mikati said. His remarks came during the opening of the Arab Economic Forum, which runs until May 11 and includes participants from over 21 Arab countries at the Phoenicia InterContinental Hotel.
The 200 participants, which include government officials from Kuwait, the United Arab Emirates, Tunisia and Saudi Arabia, will discuss economic challenges facing the region.
During his address, Mikati also said that Lebanon’s real GDP growth was “in full swing” in 2012, describing it as the highest among non-oil importing countries.
He added that this growth was related to capital inflows, a rise in bank deposits and an increase in the Central Bank’s reserves of foreign currencies.
Reviving Lebanon’s economy rests on three principles, he said.
“The first is to provide a conducive environment to attract domestic and foreign investments, revive the movement of Lebanese exports that is supposed to grow at rates double the current ones and revive sectors related to the knowledge economy and innovation,” Mikati said.
“I call from this Lebanese-Arab platform for a unified, Lebanese, national effort that is necessary in this critical phase and aims to protect Lebanon and fortify it to overcome challenges,” he added.
The prime minister also discussed a reform plan which he said he submitted to Cabinet and which rests on the three main pillars he said were necessary for economic advancement.
Central Bank Governor Riad Salameh said that up to April of this year the Central Bank bought $900 million worth U.S. dollars which reflects growing confidence in the Lebanese pound.
The Central Bank’s foreign currency reserves now exceed $30 billion, excluding the gold reserves which are valued at more than $11 billion.
“Demand for Lebanese treasury bills and dollar denominated Eurobonds is good and the low interest rates on them reflect the stability in the market. These rates will remain stable as long the budget deficit conditions are respected,” Salameh explained.
He added that Lebanese banks will increase their capital adequacy ratios up to 12 percent in 2015 according to Basil III conditions through increasing capitals and without even reducing loans.
“Initial indications show loans will exceed 13 percent in 2012,” he said.
Salameh reiterated that the Central Bank insists on distinguishing between commercial and business banks.
Salameh said the Central Bank will not allow mergers between the 11 leading banks in the country.
“We have taken precautionary measures to protect Lebanese banks that operate in countries experiencing political and security turmoil,” he said.
The governor also commented on the government’s efforts keep the budget deficit low.
He underlined the need to allow the private sector to take part in infrastructure projects to alleviate he pressure on the government.
Salameh also supported a sound energy policy and initiative to create more jobs.
Joseph Torbey, the president of the Association of Banks in Lebanon, gave a general overview of the Lebanese banks situation in light of the prevailing conditions in the region.
“We realize that we are operating within a dollarized economy with an average of 65 percent. For this reason we are working under the following formula: High liquidity and modest profits,” Torbey said.
He also shed light on the spread of Lebanese banks abroad, indicating that Lebanese banks are now operating in 32 countries around the world.
“We are managing $165 billion in assets or four times the size of the Lebanese economy,” Torbey said.
Tunisia’s Prime Minister Hamadi Jabali, one the key speakers in the opening of the forum, was upbeat about the prospects of economic growth in his country.
“I am not disclosing any secrets when I say that despite the difficult circumstances which Tunisians passed through, we have achieved positive results when our economy grew from -1.8 percent to 2 percent. We have also noticed that the size of industrial investments rose by 42 percent while foreign investments surged by 35 percent,” Jabali said.
He called on the Arab investors and businessmen to invest in Tunisia to help the economy grow, noting that the size of Arab investment in his country was still very low and did not reflect the investment opportunities which Tunisia offers.
Tunisia’s Investment Minister Riadh Bettaieb told The Daily Star he expected the Tunisian economy to get back on course in 2012 as the government pursues efforts to attract foreign and local investments, boost tourism and develop infrastructure, and improve governance.
Bettaieb said the Tunisian government was drafting a new investment law to guarantee the rights of both local and foreign investors as well as the freedom of investment.
“If investors build successful businesses, Tunisia will profit,” he said.
The Daily Star