Central Bank Governor Riad Salamé announced a financial package aimed to stimulate lending and support domestic demand in 2013.
He said the Central Bank will extend LBP2,000bn, or $1.3bn, in loans to commercial banks at an interest rate of 1%. In turn, the banks will lend the money to their clients at an interest rate ceiling of up to 6%, contingent on the loan's amount and maturity. He noted that LBP1,300bn, or 65% of the aggregate stimulus, will target the housing sector; LBP300bn, or 15% of the funds, will be extended for research & development and alternative energy projects; while the remaining LBP400bn will be allocated to productive sectors.
Governor Salamé indicated that the Central Bank will allocate the funds to banks on a first come first served basis, and has set an LBP800m, or $530,680, limit to be lent to a single customer. He expected the proposed economic stimulus plan to generate growth of 2% to 3% in 2013 if the full amount is utilized. In parallel, Governor Salamé indicated that banks will be subject to a fine equivalent to 15% of the loan’s total amount if they charge in excess of the set interest rate ceiling of 6%. The stimulus plan intends to support various productive sectors of the economy, the housing market, projects subsidized by the Kafalat corporation, renewable energy projects, and research & development ventures.
Lebanon This Week – Bank Audi Research
6 January
