Salameh meets banks

Central Bank would consider 100 percent exemption on reserves for housing loans

The Governor of the Central Bank, Riad Salameh, and the board of the Association of Bank in Lebanon (ABL) addressed the upshot of the crisis in Syria on the work of Lebanese banks operating in this country.

During their recent monthly meeting, Salameh and the banks mulled ways to control the budget deficit and reduce the ratio of public debt to GDP. The meeting also discussed the ABL’s proposal to increase the exemption on the compulsory reserve for housing loans to 100 percent.

The chairman of BLOM Bank, Naaman Azhari, said that the overall banking sector status is acceptable. He said that the local political bickering and the turmoil in some Arab states have mostly damaged economic sectors, namely the tourism industry.

According to Azhari, major traders have redirected the imported goods to the Iraqi market, thus avoided losses resulting from the decline in local consumption.

Azhari urged cooperation between the Central Bank and the government in curbing the growth of public debt through setting an annual upper limit for fiscal deficit over a period of five years.

Governor Salameh said that he would consider funding public debt through the market. Funding projects through local currency treasury bonds of seven-year maturities is a considered option, Salameh said. He also promised considering increasing the ratio of exemption on compulsory reserve on housing loans from 90 to 100 percent.

Salameh projected 15 percent growth of loans this year, mainly driven by housing loans which could amount to $1.3 billion. He also expected an increase of between 5 and 7 percent in deposits on annual basis.