| 20 Nov 2009 |
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Hariri seeks new economic order to create perpetual prosperity
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20 November 2009
BEIRUT: Lebanese Prime Minister Saad Hariri pledged on Thursday to establish a new economic order in Lebanon through which all Lebanese will be able to benefit from the prosperity opportunities that are going to be witnessed in the coming period of time. “All the Lebanese will be able to benefit from the prosperity opportunities and this can be achieved by developing our comparative advantages, hence, developing our creative and productive capacities and potential,” he said.
The remarks of the newly appointed prime minister came during the opening of the Union of Arab Banks annual conference held at Phoenicia Intercontinental Hotel in Beirut.
The conference aims to shed some light on the new approach that Arab economic decision makers should comply with in the subject of Pan-Arab investment and how funds could benefit the Arab citizen leading to achieve the well-being of Arabs from one part, and gain fair and safe revenue of the Arab capital from the other.
Hariri said that the newly formed government was not only politically unified but it was also a social development and economic unity government that reflects the ambitions of all Lebanese.
“We want the ministerial statement to be an introduction to achievements that are much awaited by the Lebanese in all the fields in order to improve the living standards and ensure a better life for them,” the prime minister said.
The Cabinet’s policy statement is expected to be ratified prior to Independence Day on November 22 as political parties seemed to have agreed Monday to postpone the discussion of controversial issues, including but not restricted to Hizbullah’s weapons, to upcoming dialogue sessions.
In his speech, Hariri took the occasion to praise the resilience of the Lebanese banking sector, saying that Lebanon now has became a haven for the incoming flow of capital “due to the policy adopted by the central bank and the very strict control mechanisms that are in line with the national standards.”
He underlined the importance of creating an appropriate environment in order to enforce the activity of the private sector and preserve high growth rates in addition to ensuring job opportunities for fresh graduates.
The prime minister also emphasized the role the Arab banks can play in financing the private sector investments.
“Arab banks have also, in the light of huge liquidity, a major role to play in financing infrastructure and socio economic projects,” he said. “The new challenge facing Arab banks today may be that they succeed in being major partners in the economic development.”
Hariri believes that a major challenge facing the Lebanese government today is to succeed in attracting investments from Arab countries because they are the major essence for development and growth in Lebanon.
“Our responsibility today is to ensure political stability and legal frameworks necessary to encourage Arab banks to finance investment projects,” he added.
For his part, central bank Governor Riad Salameh outlined the bank’s main policies for 2010 which include pursuing the encouragement of Lebanese banks to expand outside Lebanon, and to liberate all the foreign investments abroad.
“There will be more links between the individual expansion capacity of the bank and the commitment of these banks to the criteria imposed in Basel II conference,” he said.
“Of course we add to this the criteria imposed by the central bank related to liquidity and investment,” Salameh added.
He added that the central bank of Lebanon has established a special unit for sound governance of financial institutions and banks. “This unit will look into the factors required to have sound governance and will study the structure of the board of directors and its operations,” he said.
Salameh again praised the performance of the Lebanese banking sector and said that people have a great trust in the Lebanese banking sector.
“We see this trust in the rise of deposits which reached 20 percent annually. We have a surplus in the balance of payments that has reached $6 billion up to October 2009 and this is an unprecedented record,” he said.
“We also have an increase of remittances which have reached $7 billion in 2009 and a growth rate of 7 percent.”
Salameh believes that Lebanon’s first priority is to fight the budget deficit in order to ensure additional resources for development. “The real value of the public debt will witness a drop due to the coming global inflation.
“The dangers imposed by the public debt will diminish as well as a result of the improvement in the value of the Lebanese government’s assets and those available at the central bank,” he said.
Among the speakers in the conference was the chairman of the board of directors at the Union of Arab Banks Adnan Youssef, who said that Arab banks run more than $2.2 trillion of assets while depending upon a deposit base of more than a trillion dollars, thus indicating the bigger role in terms of vitalizing local and regional investments, and seeking to contribute in removing the Arab economies from the crisis.
“Arab banks are heading towards a moderate growth rate in profits ranging between 5 and 6 percent by the end of 2009,” he said.
“The deposit and operations growth is expected to rise with a medium average of 8 percent, and the bad debts of Arab banks only represent 1 percent of the funding portfolios value since the beginning of the global financial crisis.”
Youssef stressed on the importance of directing Arab investments to the Arab world instead of directing them to foreign markets.
“Arab countries receive a small share of the direct foreign investment where reports indicate that this share is less than $90 billion which is equivalent to less than 6 percent of the world investments,” he said.
Youssef’s comments were echoed by Joseph Torbey, head of the Association of Banks in Lebanon banks, who emphasized the importance of increasing cooperation between Arab governments in order to create a suitable investment environment in this region.
“It is also necessary to create specialized investment funds to support small and medium enterprises to boost their investment and productive sectors,” he said.
© Copyright The Daily Star 2009.
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