Innholdsfortegnelse for Winter - 2022 i Lebanon Opportunities

Evidently, those active in the current political structure, whether in power, or in the opposition, or on the streets, have failed the country in preventing, then managing the multiple crises. Currently, they lack a plan. This applies also to friendly countries and donor organizations. Locally, the political behavior that has led to the catastrophe is still unchanged. Le Hezb is performing its regular routine of holding the country hostage until it gets what it wants. We have seen it before at various stages. The social, fiscal, and economic consequences were disastrous. Their cumulative effect has resulted in the apocalypse. But it will not refrain from encores. The IMF is not a single item recipe for economic revival The only idea on the table is reaching an IMF program. It is…

Provided by Subscriptions to foreign funds rebound Subscriptions by local investors to foreign investment funds increased 26 percent in 2020 to $798 million, registering a rebound from a downtrend in recent years, according to the Annual Report of the Capital Markets Authority. Subscriptions to local funds were also going through a downtrend which continued but at a slower pace and recorded a decrease of 12 percent to $238 million last year. The number of subscribers to foreign funds jumped by 31 percent in 2020 while the number of those subscribing to local funds inched down by one percent. “Investors have opted for foreign funds because of lack of attractive offerings on the local market. They were also looking for a safe haven for their savings although they were withdrawing their…

▶ Links: Click this article’s entry in ‘Table of Contents’ on our website The authorities’ lack of concern, for the economy and the welfare of a ruthlessly impoverished population, continues to amaze more international experts. The diplomatic crisis with Gulf countries, Lebanon’s major trading partners, is very likely to worsen the severe crisis that was “manufactured” by the political class. A way out of the inferno is dimly possible with an IMF program, better prospects for investment inflows, and foreign assistance. Government is in a fantasy land Government officials are in a fantasy land, said Olivier De Schutter, UN Special Rapporteur on extreme poverty and human rights. He said that officials have no sense of urgency and are not taking responsibility for a “manufactured” crisis that had ruined the lives…

Clients are as confused as their banks when dealing with ‘fresh’ accounts. Before the crisis, terms and fees for account management used to be similar between banks, as they competed to attract the most customers and expand their market share. This is not the case anymore. Banks have become picky, and are shrinking their roster of individual clients. With their revenues from interest rate margins having plummeted, banks are now relying much more on fees charged on various transactions, many of which used to be free of charge. Account fees Before the crisis, most accounts were managed for free or for a nominal amount collected in lira. The fee has been increased manifold and is being charged in fresh funds. Opening an account was also charged just a minimum to…

Summary of Losses Incurred in Two Years GDP: $50+ billion in aggregate losses in output 90 percent loss in the real value of lira exchange rate 80 percent loss in the real value of USD bank deposits Government deficit: $1.5 billion Foreign Exchange reserves down by $15 billion Balance of Payments deficit widened to $10.6 billion (2020) from a deficit of $5.9 billion (2019) Inflation / CPI: triple digit when expressed in LL Minimum monthly wage dropped from $425 to $32 Public servant starting monthly wage dropped from $630 to $48 Unemployment: from 11.4 percent pre-crisis to 28 percent in February 2020 (pre-Covid-19) then to 40 percent in the November-December period of the same year Registrations at NSSF declined by 40 percent (by 500,000 adherents) Poverty increased to 80 percent…

Deliberate Macroeconomic Losses “The Lebanon financial and economic crisis is likely to rank in the top ten, possibly top three, most severe crises episodes globally since the mid-nineteenth century,” said an April 2021 report by the World Bank, portraying the crisis as a “deliberate” act. Since 2018, the economy continues to witness its worst performance ever over the period 1993-2021. GDP has been shrinking in the last three years and culminated with a 20 percent contraction in 2020. The only other contraction over the 28-year period was a near-zero percent negative growth recorded in 1999. The economy is expected to shrink by another ten percent in 2021. According to the World Bank report, the current recession is likely to remain arduous and to linger given “the lack of policymaking leadership…

Soundbytes Less talk and more work President Michel Aoun to Cabinet Cut back on media appearances and speech Prime Minister Najib Mikati to newly appointed ministers We don’t have any cent! We will not do privatization before recovery, or we will sell for free. We will talk about it in future governments The challenge for the new government is to get to work without delay. We will therefore judge it by its actions Jean-Yves Le Drian, French Minister for Europe and Foreign Affairs Any conditions that the IMF may require will not be harsher than what we see in Lebanon today Mahmoud Mohieldin, Executive Director at IMF Lebanese government officials are in a fantasy land Olivier De Schutter, UN Special Rapporteur on Extreme Poverty and Human Rights We can support…

Provided by $87 million for Port of Tripoli The Council for Development and Reconstruction (CDR) and Egypt-based Arab Contractors have signed a contract for the first phase of the development of the Port of Tripoli. The $87 million project is funded by the Islamic Development Bank. Nabil Jisr, President of CDR said: “This will be the fastest agreement to be implemented. Guarantees will come within ten days. Work will start before winter. The project will be completed within two and a half years.” Hazem Abdul Ghaffar, representing Arab Contractors said: “The project involves the complete development and construction of new buildings for Customs, the port administration, the army, and the fire department. All the buildings will be located in one area and will be electronically linked to a control center.”…

Every morning the rooster crows, including that of An-Nahar newspaper, there is a call to restructure the banking sector. Veracious words often used with bad intentions. Some are calling for the reduction of the number of banks to just five, to perhaps dole them equitably among the lords of the sects! Others want to undertake a blood test separately for each bank in order to issue certificates of performance to label them as ‘Good’ or ‘Bad’ banks. The Good and the Bad The proponents of this approach are not saying if deposits should be considered as ‘Bad’ liabilities since assets are also classified as ‘Bad’. By international norms a ‘Bad Bank’ means non-performing assets in the loan portfolio for the public and private sectors. The banks have already provisioned for…

The period starting on October 17, 2019 (first day of the uprising) and ending on September 10, 2021 (formation of the Mikati government) was characterized by a rapid collapse of the economy and the financial system amidst persistence of political impotence and a gridlock in governance. During that period, not a single structural reform was implemented. Quite the contrary, a series of haphazardly implemented measures created a chain of negative consequences that fed each other. There was a lack of urgency on the part of various officials to deal with the mounting multiple crises as testified by bewildered visiting foreign officials and reports by international organizations that characterized the government inaction as deliberate and the officials as living in a fantasy land. There was a political gridlock that prevented any…

The Ever-Shrinking Banks Commercial banks are shrinking. Their total assets decreased by $69 billion, or 28 percent, between December 2018 and August 2021. Their term deposits plunged by $70 billion, or 45 percent over the same period as customers lost confidence in the sector and could no more engage in long-term commitments. Overall deposits decreased at a slower pace (24 percent) to $131 billion since the sharp decline in term deposits was partly offset by a surge in demand deposits which increased by nearly $29 billion. The drop in customer deposits, which is the main bank liability, and the planned increase of their capital, as required by BDL, are deleveraging the banking sector and reducing its default risk. The decline on the liability side of the banks’ balance sheet was…

Bassam Badran President of the Lebanese University The Council of Ministers has appointed Bassam Badran as President of the Lebanese University (LU). Badran, who has replaced Fouad Ayoub, has been Dean of LU’s Faculty of Sciences since 2017 and has been operating its coronavirus laboratory since 2020. He said he will tap LU’s available resources to improve its working conditions and address the impact of the multiple crises on the university in order to better serve its 86,000 students. Badran said the collapse of the lira has eroded the salaries of LU professors and administrative staff and that the minimum requirements for running the university, with its buildings, laboratories and equipment, are no longer available. He said they are working on a strategy to solve LU crises, boost its growth…

Closed Permanently Due to financial challenges Hôtel Alexandre Le Bristol Closed Temporarily City Suite Hotel Beirut, Aley Owner reclaiming management of the hotel Reopening: 2023 Hilton Beirut Metropolitan Palace Damaged from Beirut blast Budget: $1.2 million Reopening: Mar 2022 Phoenicia Damaged from Beirut blast Budget: $15 million-$20 million Reopening: Mar 2023 Four Seasons Beirut Damaged from Beirut blast Reopening: Feb 2023 Hilton Habtoor Beirut Grand Due to lockdown measures Reopening: 2022 Portemilio Due to financial challenges Reopening: N/A Le Gray Damaged from Beirut blast Budget: $24 million Reopening: 2023 Monroe Due to financial challenges Reopening: N/A The Hilton Beirut Downtown Damaged from Beirut blast Budget: $1.5 million Reopening: N/A Le Patio Due to financial challenges and Damages from Beirut blast Reopening: N/A Le Vendome Due to financial challenges Budget: $35…

(1928-2021) One of the founders of the Lebanese modernized banking sector has joined the Almighty after 60 years running one of the country’s leading banks. Azhari was one of the most distinguished figures in the banking industry. He served as Chairman of the Board of Directors and General Manager of BLOM Bank between 1971 and 2007, then Chairman of BLOM BANK Group and finally Chairman Emeritus of the group. He was elected ‘The Best Banking Personality in the Arab World’ by the Union of Arab Banks. Early Days in Syria Azhari, who earned his PhD from the Institut des Sciences Politiques in Paris, was born in Syria. He began his banking career there, at the Crédit Foncier d’Algérie et de Tunisie, a French bank. He later on found a Syrian…

The International Monetary Fund (IMF) has approved the distribution of a new package of Special Drawing Rights (SDRs) amounting to SDR458 billion to all its member countries. Each country willing to participate has been allocated approximately its relative share in the quota system. The local media published the good news, and how the amount allocated to Lebanon, estimated at SDR605 million (equivalent to approximately $860 million), would be spent. It neglected to mention previous cumulative distributions in favor of Lebanon, which amounted to SDR196 million, to bring the total to SDR801 million ($1.137 billion). It is premature to speculate how these sums will be spent. It is necessary to explain the modus operandi of the IMF and the role of Lebanon as an IMF member, in order to clarify the…

The various pressures on the process of governance, and on the lira exchange rate, in addition to dollars in banks, which have been simmering for a long time with an accelerating momentum in the preceding few months, have together led to a political and economic explosion at the onset of the demonstrations that started on October 17, 2019. Catalysts of a Simmering Situation that has Exploded Political The post-2018 election balance between various political parties – which initially allowed a government to be formed, albeit with difficulties – has collapsed. Each political faction became terrified of the popular uprising and at the same time was looking for ways to capitalize on it to win public favor, or to score points against its adversaries. Nobody won. The collapse of the entente…

In 2012, the Ministry of Energy promised that the country will enjoy a round-the-clock electricity supply by 2015. At present, Electricité du Liban (EDL) keeps on warning of complete blackout due to the lack of financing in dollars for its purchases of fuel oil and spare parts and to pay for maintenance. The lack of funding is the result of BDL’s slowness in opening credit lines for fuel imports as it struggles to safeguard what remains of its foreign currency reserves. Before the collapse of the currency, loss-making EDL charged a tariff in lira that was nearly half the cost of production. At the devalued rate, the tariff represents around four percent of cost. EDL is selling electricity at a 96 percent discount! A change in tariff is a government…