Innholdsfortegnelse for July 2020 i Lebanon Opportunities

Crash! The tenets of the economic system have floundered. Confidence has evaporated amidst a hard landing that has left severe casualties represented by rising unemployment rate (see page 80), a shrinking banking sector (page 100) that has been reduced to a zombie-state, and a leadership in tatters. There is enough left in the economy to allow a restart. But there isn’t an attempt at that. A duel of figures After much delay and leaked drafts, the government approved a ‘Financial Recovery Plan’ concocted behind closed doors. It was attacked – even ridiculed – by most local stakeholders. It went knocking the doors of the IMF proposing to level the entire financial system to ground zero – a financial 9/11. Banks responded with their own numbers. Parliament intervened. The debate has…

Provided by National Geographic has Lebanon third most exciting destination National Geographic (NatGeo) has included Lebanon in its 2020 Traveller’s Cool List as one of the 20 most interesting destinations. Lebanon is the third in the list following Namibia and Baja (California). “Lebanon is back on the travel map, and its improved safety credentials are the catalyst,” said NatGeo. “The Foreign and Commonwealth Office lifted restrictions on travel to the country last year and UK travel companies are returning in droves,” it said. This insures that the country conserves its place as a touristic destination, according to Wadih Kanaan, Head of the Tourism Committee at the Economic and Social Council. “Including the country in such lists will encourage foreign investments in the tourism infrastructure,” he said. YellowWood Adventures, Cox &…

Provided by $40 million in medical equipment fast-tracked by World Bank The World Bank has approved the re-allocation of $40 million under the current $120 million Health Resilience Project to strengthen the capacity of the Ministry of Public Health (MoPH) to respond to the coronavirus crisis by equipping governmental hospitals and increasing their ability to test and treat suspected cases. Contracts with the World Health Organization (WHO) and United Nations Office for Project Services (UNOPS) have been concluded. A fast-track procurement of criticallyneeded medical equipment and supplies was already underway. “There are concerns that the outbreak will particularly hit the poor and the refugee population. The Government has prepared a Health Sector Response Plan, mobilized resources to equip additional public hospitals with critically-needed medical equipment, and strengthened risk communication to…

Name Bars and Pints Sal Capital (Shares) LL30, 000,000 (1,000) Directors Ziad Mansour Cordahi (Chairman) (475), Joe Edgard Chidiac (500), Haytham Elias Kikano (25) Reg. address Lot No. 33 Saifi, Beirut Object General trade, e-commerce, management of tourist projects, hotels, restaurants, franchising, commission and tenders Banker Banque Libano-Francaise Solicitor Me Joseph Elie Raphael Auditor Georges Boulos Bejjani Name Mindsome Corporation Sal Capital (Shares) LL30, 000,000/ (1,000) Directors Darine Toufic Osmane, wife of Wassim Ammache (Chairman) (840), Toufic Mohamed Osmane (10), Wassim Mohamed-Rabih Ammache (150) Reg. address Lot No. 1139/13 Mazraa, Beirut Object General trade, commerce of food products, vitamins, cosmetics, website design and maintenance Banker Fransabank Solicitor Me Ziad Tarek Chehab Auditor Diaeddine Mohamed Sarrouh Name E.I.T Group Sal Capital (Shares) LL30, 000,000/ (1,000) Directors Bahaeddine Mahmoud Halabi (Manager) (900),…

Even from just an informative perspective, and without delving into the intricacies of figures and equations, it would be worthwhile to shed an alternative light on the actions undertaken by the Central Bank (BDL) and its governor since 1993. Obviously, politics, economics, and finance are interdependent. This postulate, or truism, was ignored by most of what was published on this topic. As a result, the actions of Riad Salameh have been judged as if he was at the helm of the Swedish Central Bank, while absurdly completely ignoring all the local and regional political and security developments since the early 1990s. 1993 Israeli aggression. The country, and BDL, hardly in a state of recovery, suffered an Israeli attack following a strike by Hezbollah. It was the first shock that toned…

Soundbytes A number of countries have expressed their desire to help Lebanon, with France at the forefront President Michel Aoun The State is no longer able to protect its citizens and secure them a decent living Prime Minister Hassan Diab This isn’t about bailing out existing creditors or bailing out the economy. The IMF is really there to support the economy and the politicians if they are willing to make the hard economic choices to move forward and strengthen their economy. It’s too early for us to tell whether they’re willing to do that or not Steve Mnuchin, US Secretary of the Treasury - Claims that transfers to Switzerland belong to bankers are inaccurate - The law doesn’t require the Central Bank to coordinate with the government Samir Hammoud, Chairman…

Provided by Switzerland declines request for freezing assets The Swiss Foreign Ministry (Federal Department of Foreign Affairs (FDFA)–Directorate of International Law) has responded negatively to a request for mutual legal assistance submitted by Lebanon in January 2020. The FDFA said that the conditions for cooperation have not been fulfilled. In a letter to the Lebanese Swiss Association (LSA), it said: “The population is still demonstrating and calling for a real change. In other words, the asset freeze… is not a tool to impose change in other countries.” It said regarding the freeze for purposes of confiscation in the event mutual legal assistance proceedings fail, that the Federal Illicit Asset Act provides for restrictive conditions, which only apply in exceptional circumstances. “These restrictive conditions are clearly not fulfilled in the case…

Provided by Construction permits down 20 percent The number of construction permits decreased 20 percent in 2019 from the previous year to 10,991. These permits cover six million square meters (m2), a 32 percent decrease. The average area per permit is 553 m2, down by 16 percent compared to 2018. The decline was recorded in almost all areas. Beirut was the exception. It recorded a drop in the number of permits, but an increase in total areas. This is because some permits were issued for large area projects in Beirut, according to Jad Tabet, Chairman of the Order of Engineers in Beirut. Mount Lebanon, which has the largest share of the number of construction permits, saw the sharpest decline, with around 40 percent drop in areas covered by permits. Around…

The second edition of the government’s plan, published on April 30, 2020, opened the door wide for a national debate across-the-board with both residents and non-residents joining the conversation in addition to prominent international bodies including the International Monetary Fund (IMF), the World Bank, and a group of countries that support Lebanon. Global financial institutions have also participated in the debate such as Bank of America and Morgan Stanley. Guesstimate of alleged gargantuan losses As the plan’s stance towards the banking sector (both the Central Bank and commercial banks) was extremely negative, and in order to take part in this unique national endeavor, the Association of Banks (ABL) prepared and published a paper as a ‘contribution’ for the financial and economic recovery of Lebanon. ABL’s paper includes five strategic courses…

In a poll conducted by Infopro Research, banks have rejected more than 90 percent of applications from companies wishing to benefit from BDL circulars (552 and 547) that allow zero-interest loans to cover salaries and operating expenses during the Covid-19 lockdown. BDL had first issued ‘Circular 547’ allowing banks to borrow from the Central Bank at zero-percent interest (in either lira or dollar) and relend the money to their clients at no interest. Banks had complained that the circular was not clear enough. BDL then issued ‘Circular 552’ to clarify the provisions of the preceding circular but to no avail. Banks do not want additional risk Jocelyne Chahwan, Deputy General Manager at BLOM Bank, said that there was a large demand for rescheduling loans at zero-percent interest rate over the…

Provided by BLOM launches savings program for rural areas The USAID-funded Livelihood and Inclusive Finance Expansion (LIFE) project launched, in collaboration with BLOM Bank, an initiative under the theme ‘Bringing Peace of Mind to LIFE’ to bring rural clients into the bank’s financial inclusion strategy. As part of this initiative, BLOM Bank has introduced ‘START/ ’, a special savings account without a minimum balance. START offers a preferential interest rate on amounts as low as LL40,000 to encourage low-income individuals to save money. BLOM Bank said in April 2020 that it will roll out a nation-wide campaign to promote the new program on major TV stations. The bank said it will carry out dedicated visits to the targeted regions to encourage unbanked people to open a savings account. BLOM Bank…

Provided by Interest rate cuts on subsidized housing loans The Central Bank (BDL) has reduced the interest rates on subsidized housing loans, according to a BDL circular. The interest on loans provided by Banque de l’Habitat (Housing Bank) is to be calculated on the basis of 20 percent of the interest rate on one-year Treasury bills plus 3.45 percent. Loans provided through the Public Corporation for Housing (PCH) are to pay an interest equal to 20 percent of the rate on two-year T-bills plus 1.6 percent. The previous interest rate on both PCH and Housing Bank loans was 5.5 percent. Housing loans provided by commercial banks and that exceed LL800 million ($531,000 at the official exchange rate) will pay an interest rate equivalent to 25 percent of the rate on…

Michel Accad Executive General Manager, Bankmed Michel Accad has been named Executive General Manager of Bankmed to replace Raoul Nehme who has been appointed as Minister of Economy and Trade. Accad, who will take charge of his new position in May 2020, has been an independent member of Bankmed’s board since August 2019. He is also Chairman of the bank’s risk committee and is member in each of its remuneration committee and governance and nomination committee. Accad’s work experience of over 40 years was in the banking sector in the Arab region. Before joining Bankmed, he was the CEO of Al-Ahli Bank of Kuwait (ABK). Accad was also CEO of Kuwait-based Gulf Bank and was instrumental in helping it achieve a turnaround to profitability following the 2008 crisis. Prior to…

The government’s Financial Recovery Plan was met by mostly negative reactions by private sector representatives, economists, and the street. Some of them rejected the official document in its entirety. Other parties saw positive elements especially in the plan’s assessment of the magnitude of the financial ‘black hole’ as described by the Prime Minister. The review of Lebanon Opportunities of the government’s plan shows that it has failed to come up with a correct diagnosis of the crisis and that it has made proposals that would deepen it further. We have proposed an alternative Economic Revival Plan (infopro.com.lb/revival). Without delving into the numbers (they are outlined in the alternative plan), here are the basic points that we take issue with. No confidence-building measures The plan was devised behind closed doors without…

The Eurobond prices, which were already trading below par, started a downtrend in the last quarter of 2019 with the outbreak of the anti-government protests and as the exchange value of the lira started to collapse. The straw that broke the camel’s back was the government’s decision to default on its Eurobond obligations in early March 2020. Eurobond prices plunged further plummeting to below $20. Prices have somehow stabilized since March. Bid prices on June 1, 2020 ranged around $16 to $18. Outstanding Eurobonds stood at $31.3 billion at the end of 2019. Banks ask government to repay Eurobond on time In early February 2020, the banks, which hold around $10 billion worth of Lebanese Eurobonds, had a premonition that a government default was imminent. The Association of Banks (ABL)…

There is consensus among the statements and writings of people in power, and the experts, in the media and on social media, on a treatment for the current crisis. Mostly, these various statements address the “protection of small depositors,” recapitalizing banks, and rescheduling or restructuring the public debt. 86 percent of depositors are protected Small depositors are defined as holders of less than LL75 million ($50,000 – according to the official exchange rate). This is the amount insured by the National Institute for the Guarantee of Deposits according to new legislation. This guarantee covers a broad segment of depositors, nearly 2.5 million people, or 86 percent of all bank customers. The size of the deposits guaranteed by law is close to $32 billion, or a little less than 22 percent…