Central Bank Gov. Riad Salameh said Thursday that Lebanese commercial banks have succeeded in maintaining the inflow of foreign currency deposits with the support of BDL, which helped preserve an acceptable level of economic activity in the country. He said customer deposits had risen by an average of 4 percent. Salameh was speaking at the opening of the annual Arab Banking Conference, this year titled “Public Private Partnership for achieving SDGs,” organized by the Union of Arab Banks.
The governor also projected GDP growth at 2 percent in 2018, very close to average growth in the Middle East and North Africa region.
“The Central Bank has managed, through financial engineering, to preserve monetary stability. BDL will continue to pursue this method, which secured its monetary objectives,” Salameh said.
“The cost of attracting such funds depends on the fluctuation of risks, especially political risk and taking into account the fiscal deficits and inflation. BDL respects market trends in identifying benefits that have reached levels of monetary equilibrium,” the governor said.
He added that the interest rate on deposits in Lebanese pounds is 8.5 percent, while the interest rate on deposits in dollars is 5 percent.
“The interest rate has exceeded this rate in private products representing about 1 percent of total deposits, and does not reflect the general rate of interest base in Lebanon,” Salameh said.
The governor also underlined the importance of partnerships between the public and private sectors. “We hope that the private sector increases its capital so that it has the capacity to participate in PPP projects,” Salameh said.
On the sidelines of the conference, Chairman of the World Union of Arab Bankers Joseph Torbey emphasized that PPP law in Lebanon dates back to less than a year ago.
“It needs implementation decrees so that the private sector and the banking sector can kick off the process. Moreover, since the funding for such projects is of a long-term nature, banks can benefit from risk-sharing schemes and risk guarantees from international bodies and agencies,” he told The Daily Star.
Torbey said that the private sector has the expertise that can largely benefit the public sector.
“In Lebanon, we see no alternative for sustainable growth other than the public and private partnership to ensure the enhancement of the decaying infrastructure in the country. That’s why the government needs to be formed soonest to ensure the needed stability environment for growth and development, and launch the reforms process prerequisite of the CEDRE funds,” he explained.
Torbey warned that regional conflicts and internal disputes were still hindering the private sector from engaging in PPPs. He said the projects that could be started under PPP were numerous and included infrastructure, waste management and electricity initiatives.
“We see that it is imperative that the project management be handled by the private sector to secure expertise, skills and transparency, and that long-term funding be also secured by international organizations,” Torbey said.
He added that transparency should be clearly stipulated in the decrees that the government is expected to draft as soon as it is formed, noting that contracts between parties to PPPs should include clear clauses regarding performance and transparency.
Former Prime Minister Fouad Siniora said PPP projects that will be handled by the new government include the expansion of Rafik Hariri International Airport, the Khaldeh-Okaibeh highway and the Lebanon Cloud Data Center.
The Daily Star