Lebanese banks will pump US$1.45bn into the market as part of
a Central Bank directive to boost the country’s ailing economy, the Daily Star
reported.
The funds will help enhance lending to “productive
sectors” at low interest rates over ten years, according to a memo sent
by the Central Bank to commercial banks, the Beirut-based newspaper
reported.
Lebanon’s service-oriented economy, which grew by an average
of 8 percent per year from 2007 to 2010, faltered in 2011 to 1.5
percent growth, the slowest since 2006 when Hezbollah and Israel went to war.
Domestic
political and regional uncertainty brought on by popular uprisings that toppled
four Arab leaders have contributed to the slowdown and loss of confidence.
A two-year conflict in neighbouring Syria has also made it
difficult for the country’s economy to regain momentum. The violence in
Syria has seeped into the northern city of Tripoli, sparking sectarian fighting
among supporters and opponents of Syrian leader Bashar Al Assad.
Saudi Arabia,
Bahrain, Qatar and the UAE have all issued travel warnings advising their
citizens against travelling to Lebanon. Lebanese banks have seen their
profitability decline as a result of the crisis in Syria and the turmoil has
dampened the tourism industry, which generates as much as US$8bn a year.
Under the Central Bank’s plan, the regulator will give
credit facilities to commercial banks at an interest rate of 1 percent, allowing
them to provide soft loans to applicants with an interest rate between 5 and 6
percent, the newspaper reported. The measures would help stimulate economic
activity.
Lebanon’s economy grew 2 percent in 2012 and is projected to
expand 2.5 percent this year, according to previous International Monetary Fund
estimates. Growth figures may differ once the government releases final figures
for the preceding year in the first quarter.
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