28 February 2017
The Head of the Banking Control Commission of Lebanon, Mr. Samir Hammoud, held a lecture at Beirut Arab University – Tripoli Campus entitled “The Fiscal Policies for the Protection of the Banking Sector”.
The event was attended by Dr. Safwan Dinnawi, representing HE Najib Mikati; Dr. Mostafa El Helweh, representing HE Mohamed Safadi; Khaled Ait, representing ex-Minister Ashraf Reefi; Eng. Jad El Shami, representing Judge Ramzy Nahra, Mayor of the North; Prof. Khaled Baghdadi, BAU Vice-President for Tripoli Branch Affairs; Mr. Mohamed Hammoud, Deputy Secretary General for Tripoli Branch Affairs; Mohamed Saadia, Head of the Municipalities Federation of Dennieh; Mr. Milad Fadel, Director of Banque du Liban in Tripoli; directors of banks, public and private organizations; accountants; as well as the directors, staff-members and students of the faculties.
The lecture was opened with the Lebanese National and BAU Anthems. Then, the Director of the Faculty of Business Administration, Dr. Hani Shaarani, gave a speech, stressing that despite the long lean years, as well as the local, regional and international political and security situation, the Lebanese economy managed to maintain a minimum degree of growth. The fiscal policies adopted by the Banque du Liban have contributed to the establishment of a general sense of security and stability, despite the public debt and the budget deficit. The Bank also contributed, through its policies, to the enhancement of the economic cycle. He also added that the Bank also managed to improve the international fiscal assessment of Lebanon from “negative” to “stable”. The Bank is also about to pump ca. 1500 billion Lira to further enhance the economic cycle during 2017.
This was followed by a speech by Mr. Samir Hammoud, Head of the Banking Control Commission in Lebanon, who highlighted five main points that form the basis for the banking sector: its role in the development of the economy, the role of central banks and the instruments of the fiscal policy, the banking sector in Lebanon, fiscal engineering, and directives 135 or 284.
According to Hammoud, the belief that the main purpose of central banks is to issue the currency and regulate the banking system may be true. However, these two existed long before central banks were established. The British Central Bank was established in 1694 and the Federal Bank in 1913. He also indicated that foreign banks, prior to 1975, were in control. The number of banks in Lebanon amounts to 52, most of which are commercial. In 1988 the total volume of these banks amounted to 16 billion, while the private assets amounted to 400 million dollars, i.e. 0.24%, while in 2016 it became 9%. He compared this to the situation abroad in countries such as Turkey, Egypt, Jordan and France.
Hammoud added that the growth of deposits was below the requirements needed to meet the needs of the private and public sectors, while the external assets of Banque du Liban were diminishing. Part of the traditional solutions is to increase the interest rate for dollar deposits, and hence for the Lira, which may have a negative impact upon the public debt. He also stressed upon the need to implement Directive 135, since banks are expected to support those firms that are floundering financially.
This was followed by a discussion with the audience, focusing on the current state of banking, issues of loans, treasury bonds, and others.