Drop in subsidized loans

Industrial SMEs have highest share

The portfolio of subsidized loans granted by the Central Bank (BDL) to the private sector fell by 64.5 percent year-on-year in the first quarter of 2013 to reach $101 million, compared to $286 million in the same quarter of 2012. “Most businesses are adopting a wait-and-see situation in the current economic conditions and regional turmoil,” said Samih Saadeh, Vice Chairman and General Manager at Banque Bemo.

The industrial sector tops the list of subsidized loans, with about $54 million. The shares of the tourism and agricultural sectors were $39 million and $8 million respectively. “Subsidized banking loans to the industrial sector are mainly targeting small and medium enterprises (SMEs) looking to grow and develop their business,” said Saadeh. “Banks may be less eager to lend to other sectors like tourism or agriculture, due to the big slowdown in those sectors currently, unless the project is promising.”

On a cumulative basis, BDL subsidized loans totaled $5.17 billion between the year 1997 and March 2013.

Subsidized medium- and long-term loans constituted the bulk (around 80 percent) of the total loans portfolio, followed by loans guaranteed by Kafalat (20 percent).

The number of Kafalat-guaranteed loans to SMEs fell by 26 percent to 388 in the first half of 2013. The total value of those loans fell by 24 percent year-on-year to $54 million. This is a continuous trend from 2012 where loans benefiting from Kafalat guarantees fell by 20 percent on an annual basis to 1,025. Their aggregate value dropped by 16 percent to $136.6 million.

The agricultural sector accounted for around 40 percent of total Kafalat guarantees, followed by the industry and tourism sectors with 34 percent and 17 percent respectively. Elie Akhrass, Senior Credit Analyst at Kafalat had said earlier: “We cover only productive projects having a transformation process.”