Lebanon expected to achieve higher economic growth

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"All indicators are on the rise, including bank depo?sits," added the leading banker.

One of the reasons behind the upbeat mood in the country, according to analysts, was the outcome of the parliamentary elections which resulted in a clear victory for March 14 Forces.

One the first results of the elections was the unexpected rise in the number of tourists in June alone.

Middle East AirlinesMiddle East Airlines chairman Mohammad Hout told The Daily Star that the number of tourists in June alone rose by more than 20 percent.

"All of our flights to Beirut are fully booked and we expect this to continue until the end of the summer," Hout added.

There are reports that many of the tourists are unable to find vacant rooms in the five- and four-star hotels in Beirut and Mount Lebanon.

The Arabic daily newspaper As-Safir, citing informed sources, said that remittances and capital inflow in the first five months of this year had risen by some 55 percent to reach $6.4 billion, the highest in Lebanon's history.

Many rating agencies upgraded or maintained the stable outlook of Lebanon in the aftermath of the tightly fought parliamentary elections.

According to Capital Intelligence dated July 2, 2009, the international rating agency has upgraded the Republic of Lebanon's long-term foreign and local currency ratings for to "B" from "B-," while maintaining a "Stable" outlook.

The rating agency attributed the rating upgrade first and foremost to the central bank's high level of foreign currency reserves, which almost doubled since year-end 2007 (and currently account for 400 percent of Lebanon's foreign currency debt service), thanks mainly to a sustained demand for the Lebanese pound owing to the improved political situation and favorable interest rate differentials.

Capital Intelligence also cited the decline in near-term financing risks, on the back of increased investor confidence and banking-sector liquidity, as yet another major factor affecting its decision.

Furthermore, the agency also factored in its decision the improved political situation and resilience of the banking sector to the global financial crisis.

The rating agency, however, warned of Lebanon's high gross debt level (162 percent of GDP and 672 percent of budget revenues), positioning the country as the most indebted among rated countries.

The rating agency has also upgraded the long-term foreign-currency rating of six Lebanese banks, namely Bank Audi- SaradarBank Audi- Saradar, BBACBBAC, BLOM BankBLOM Bank, Byblos BankByblos Bank, Credit LibanaisCredit Libanais and FransabankFransabank from "B-" to "B," with "Stable" outlook.

In the banking sector, the consolidated balance sheet of commercial banks in Lebanon reveals a 2.03 percent monthly expansion in total banking sector assets to LL153.239 trillion ($101.65 billion) in May 2009, up from LL150.189 trillion in April 2009.

"I expect the balance sheet of commercial banks to exceed $110 billion while customer deposits will reach more than $83 billion," Bassil said.

He added that tourism could generate more than $3 billion if Lebanon had a good season.

"Many Arab tourists are buying properties in Beirut and the mountains and this will definitely lead to a rise in the prices of real estate," Bassil said.

But Bassil and financial analysts stress that the biggest challenge facing Hariri is the formation of national unity government that can address all of the country's economic and financial problems and most notably the public debt which is now more than $47.5 billion.

"Hariri must have good team in the cabinet. A team that can produce instead of blocking reforms. We don't want to see a repetition of the old government," Bassil said.

He added that one of the first priorities is to speed up the privatization of the telecom sector and allow the private sector to get more involved in the affairs of the electricity sector.

"We can eliminate the losses of Electricite du LibanElectricite du Liban and even allow the state to make more money if the authorities leased the power plants to the private sector based on the concessions concept," Bassil said.