Monday, July 28, 2008
Wednesday, March 12, 2008
THE POLITICAL CRISIS IS ENDANGERING THE ECONOMIC STABILITY OF OUR COUNTRY
Lebanon plunges on risky countries list
12 March 2008
BEIRUT: Euromoney magazine ranked Lebanon 127th worldwide in terms of country risk, down by 11 notches from the 116th place globally in September 2007. The new ranking was released by Euromoney magazine in its semi-annual survey on country risk of 185 nations conducted in March 2008.
On a yearly basis, Lebanon's ranking fell by an even further 16 notches, as it ranked in the 111th place worldwide in March 2007.
Bank Audi, which published this report, said that Lebanon's score dropped by 4.9 percent from 38.95 out of 100 in September 2007 and by 3.2 percent from 38.26 in March 2007 to reach a current 37.03.
The government was hoping to achieve between five to seven percent growth in 2007 on the back of windfall crude prices in the oil-producing region.
But a series of assassinations and the political deadlock caused the country's gross domestic product growth to shrink to less than two percent last year.
In addition, the negative rating of Moody's and Standard & Poor's has complicated the government's attempts to borrow money from international markets at low interest rates.
Regionally, Lebanon ranked 16th out of 19 countries in the Middle Eastern and North African (MENA) region, dropping two spots from the 14th position in September 2007, as well as in March 2007.
"The drop in Lebanon's score over the half-year period between September 2007 and March 2008 has been coupled with a similar regional trend as the average score of MENA countries fell, by 1.1 percent, from 52.5 to 51.9," the report said.
The magazine said that in the past six months, the region's exposure to risk has risen, but not significantly as it has become adapted to turmoil.
Euromoney said the political risk accounts for 25 percent of the score's weight and refers to risk of the nonservicing of payment for goods or services, loans, trade-related finance and dividends, and the nonrepatriation of capital.
Lebanon scored 7.41 out of 25 on the latter category, with its score falling by 0.5 percent from 7.45 from the previous survey. Economic performance accounts for another 25 percent of the weight and is based on gross national income (GNI) figures per capita and on results of the Euromoney poll of economic projections.
In this category, Lebanon saw a sharper decline of 19.9 percent to score 5.73 out of
Debt indicators account for 10 percent of the weight and are calculated using the World Bank's total debt stocks to gross national product (GNP) ratio, debt service to exports ratio, and current account balance to GNP ratio.
Despite the 4.1 percent drop, Lebanon's score is still within the report's acceptable range at 7.21 out of 10.
Lebanon's debt-repayment performance remained unchanged from several previous surveys, attaining a perfect score in this category.
"Naturally, this is attributed to Lebanon's history of never defaulting on its debt. Credit ratings account for 10 percent of the weight and represent the nominal values assigned to sovereign ratings from Moody's Investors Service, Standard & Poor's and Fitch Ratings."- Bank Audi's Lebanon Weekly Monitor
Lebanon hopes for $1 billion Saudi deposit - minister
Reuters - Thursday, March 13
BEIRUT, March 12 - Lebanon's government has asked Saudi Arabia to deposit $1 billion at the central bank to boost the country's foreign currency reserves, the finance minister was quoted as saying on Wednesday.
"We, as a government, requested from the Saudi leadership a new deposit of value $1 billion. We detected a responsiveness which we hope will be translated soon," Jihad Azour told the pan-Arab Asharq Al-Awsat newspaper. "This will strengthen the reserves of the central bank and monetary stability," said Azour, whose government is locked in a paralysing political struggle with opposition forces led by Hezbollah and backed by Syria.
Saudi Arabia is a strong backer of the Beirut governing coalition. Azour told Reuters on Monday there were "positive indications" that Riyadh would make a deposit at the central bank. But he declined to give the amount. Azour said in the interview with Reuters there was no short-term need for the funds, but the deposit would send "a very positive signal to the market".
Lebanon's strong foreign currency reserves, measured at $9.8 billion at the end of 2007, were one reason cited by Moody's in a Feb. 7 statement for maintaining its low B3 rating on the country's government bonds.
Standard & Poor's in January cut its long-term sovereign foreign currency credit rating on Lebanon by one notch to "CCC+" from "B-" because of the political conflict -- the worst since the 1975-90 civil war.
The crisis has paralysed much of government, left the country without a president since November and led to bouts of street violence between followers of the rival sides.
Lebanon is saddled by public debt of some $42.06 billion -- equal to some 171 percent of its gross domestic product.
12 March 2008
BEIRUT: Euromoney magazine ranked Lebanon 127th worldwide in terms of country risk, down by 11 notches from the 116th place globally in September 2007. The new ranking was released by Euromoney magazine in its semi-annual survey on country risk of 185 nations conducted in March 2008.
On a yearly basis, Lebanon's ranking fell by an even further 16 notches, as it ranked in the 111th place worldwide in March 2007.
Bank Audi, which published this report, said that Lebanon's score dropped by 4.9 percent from 38.95 out of 100 in September 2007 and by 3.2 percent from 38.26 in March 2007 to reach a current 37.03.
The government was hoping to achieve between five to seven percent growth in 2007 on the back of windfall crude prices in the oil-producing region.
But a series of assassinations and the political deadlock caused the country's gross domestic product growth to shrink to less than two percent last year.
In addition, the negative rating of Moody's and Standard & Poor's has complicated the government's attempts to borrow money from international markets at low interest rates.
Regionally, Lebanon ranked 16th out of 19 countries in the Middle Eastern and North African (MENA) region, dropping two spots from the 14th position in September 2007, as well as in March 2007.
"The drop in Lebanon's score over the half-year period between September 2007 and March 2008 has been coupled with a similar regional trend as the average score of MENA countries fell, by 1.1 percent, from 52.5 to 51.9," the report said.
The magazine said that in the past six months, the region's exposure to risk has risen, but not significantly as it has become adapted to turmoil.
Euromoney said the political risk accounts for 25 percent of the score's weight and refers to risk of the nonservicing of payment for goods or services, loans, trade-related finance and dividends, and the nonrepatriation of capital.
Lebanon scored 7.41 out of 25 on the latter category, with its score falling by 0.5 percent from 7.45 from the previous survey. Economic performance accounts for another 25 percent of the weight and is based on gross national income (GNI) figures per capita and on results of the Euromoney poll of economic projections.
In this category, Lebanon saw a sharper decline of 19.9 percent to score 5.73 out of
Debt indicators account for 10 percent of the weight and are calculated using the World Bank's total debt stocks to gross national product (GNP) ratio, debt service to exports ratio, and current account balance to GNP ratio.
Despite the 4.1 percent drop, Lebanon's score is still within the report's acceptable range at 7.21 out of 10.
Lebanon's debt-repayment performance remained unchanged from several previous surveys, attaining a perfect score in this category.
"Naturally, this is attributed to Lebanon's history of never defaulting on its debt. Credit ratings account for 10 percent of the weight and represent the nominal values assigned to sovereign ratings from Moody's Investors Service, Standard & Poor's and Fitch Ratings."- Bank Audi's Lebanon Weekly Monitor
Lebanon hopes for $1 billion Saudi deposit - minister
Reuters - Thursday, March 13
BEIRUT, March 12 - Lebanon's government has asked Saudi Arabia to deposit $1 billion at the central bank to boost the country's foreign currency reserves, the finance minister was quoted as saying on Wednesday.
"We, as a government, requested from the Saudi leadership a new deposit of value $1 billion. We detected a responsiveness which we hope will be translated soon," Jihad Azour told the pan-Arab Asharq Al-Awsat newspaper. "This will strengthen the reserves of the central bank and monetary stability," said Azour, whose government is locked in a paralysing political struggle with opposition forces led by Hezbollah and backed by Syria.
Saudi Arabia is a strong backer of the Beirut governing coalition. Azour told Reuters on Monday there were "positive indications" that Riyadh would make a deposit at the central bank. But he declined to give the amount. Azour said in the interview with Reuters there was no short-term need for the funds, but the deposit would send "a very positive signal to the market".
Lebanon's strong foreign currency reserves, measured at $9.8 billion at the end of 2007, were one reason cited by Moody's in a Feb. 7 statement for maintaining its low B3 rating on the country's government bonds.
Standard & Poor's in January cut its long-term sovereign foreign currency credit rating on Lebanon by one notch to "CCC+" from "B-" because of the political conflict -- the worst since the 1975-90 civil war.
The crisis has paralysed much of government, left the country without a president since November and led to bouts of street violence between followers of the rival sides.
Lebanon is saddled by public debt of some $42.06 billion -- equal to some 171 percent of its gross domestic product.
Tuesday, February 12, 2008
A QUESTION RELATING TO THE BALANCE OF OUR PUBLIC DEBT AT THE END OF 2007
The Ministry of Finance has just issued its final fiscal report on the year 2007.
That report indicates that the Public Debt at the 31/12/2007 stood at 63,406 billion Lebanese pounds.
We wish to know how that figure has been arrived at. Our calculations indicate the following:
That report indicates that the Public Debt at the 31/12/2007 stood at 63,406 billion Lebanese pounds.
We wish to know how that figure has been arrived at. Our calculations indicate the following:
- Public Debt balance on the 1/1/2007 60,851 billion Lebanese pounds
- Less primary surplus 1,102 billion Lebanese pounds
- Net 59,749 billion Lebanese pounds
- Add service of the Debt in 2007 4,940 billion Lebanese pounds
- Public Debt book Balance on the 31/12/07 64,689 billion Lebanese pounds
- Public Debt balance declared by MOF 63,406 billion Lebanese pounds
- Difference unexplained 1,283 billion Lebanese pounds
When we asked a reputed economist about that apparent discrepancy between the two figures he mentioned that it may be due to the revaluation by the Central Bank of the gold Reserve, though he considers such transaction to be contrary to the norms of international public accounting.
The Minister of Finance is kindly required to provide us with some explanation for the above discrepancy.
Saturday, January 26, 2008
US cut down Libor rate to 3.5% and Lebanon is forced to pay a higher interest rate on its public debt
We are given to understand that the bills that fall due in March 2008 (around $2 billion) will be swapped for deferred bills at a higher interest rate because the local banks refuse to finance the government any more. This would mean that Lebanon will have to pay more than the average 8.5% that it is paying now, while the Libor rate in the US has come down to 3.5%.
IS THAT NORMAL?
IS THAT NORMAL?
Monday, September 10, 2007
The World Bank has granted Lebanon two loans of $100 million US dollars each at Libor rates
The World Bank has granted Lebanon two loans of $100 million US dollars each at Libor rates provided some specific reform measures are taken. This goes to prove what we have been saying all along (See our blog of June 26,2007 and Scenario III/Exporting the Debt):
"It is possible to reprofile most of our National Debt of forty billion Dollars if we prove to the International Community that we are serious about our Reform Program. We can bring down the interest rate on most of the $40 billion by half, and save some 2,500 billion of Lebanese pounds in interest per year."
See below the terms of the two loans:
NEW LOANS FROM THE WORLD BANK
1. Size of the loan: $100 million in one disbursement
2. Coupon payments:
· Variable: LIBOR plus fixed spread
· Interest is payable on April 15 and October 15 of each year
· Maturity and Repayment schedule: The loan has a 15 year maturity and a 5 year grace period. Principal repayments will be on April 15 and October 15,
Requirements from the borrower:
1. Reform of the Energy Sector
2. Improving the Business Climate.
3. Social Protection Reforms.
4. Modernizing Public Financial Management.
"It is possible to reprofile most of our National Debt of forty billion Dollars if we prove to the International Community that we are serious about our Reform Program. We can bring down the interest rate on most of the $40 billion by half, and save some 2,500 billion of Lebanese pounds in interest per year."
See below the terms of the two loans:
NEW LOANS FROM THE WORLD BANK
1. Size of the loan: $100 million in one disbursement
2. Coupon payments:
· Variable: LIBOR plus fixed spread
· Interest is payable on April 15 and October 15 of each year
· Maturity and Repayment schedule: The loan has a 15 year maturity and a 5 year grace period. Principal repayments will be on April 15 and October 15,
Requirements from the borrower:
1. Reform of the Energy Sector
2. Improving the Business Climate.
3. Social Protection Reforms.
4. Modernizing Public Financial Management.
THE GOVERNMENT HAS SUCCEEDED IN OBTAINING A REDUCTION OF THE INTEREST RATE DOWN TO 3.75% ON 2 LOANS FROM MALAYSIA TOTALLING 500 MILLION US DOLLARS
The Government of Lebanon has renegotiated with the Government of Malaysia the terms of two Bond Issues (Loans) totalling 500 million US Dollars. The interest rate has been lowered to 3.75% instead of 5% and 7.5% respectively.
The Lebanese Ministry of Finance and the Central Bank of Malaysia agreed to the following changes
1) Bond of $200 Million US Dollars
Coupon rate
7.125%
3.750%
2) Bond of 300 Million US Dollars
Coupon rate
5.0%
3.75%
For further information please contact:
Ministry of Finance
UNDP Project
Tel: 961 1 981057/8
Fax: 961 1 981059
E-mail: infocenter@finance.gov.lb
Website:
The Lebanese Ministry of Finance and the Central Bank of Malaysia agreed to the following changes
1) Bond of $200 Million US Dollars
Coupon rate
7.125%
3.750%
2) Bond of 300 Million US Dollars
Coupon rate
5.0%
3.75%
For further information please contact:
Ministry of Finance
UNDP Project
Tel: 961 1 981057/8
Fax: 961 1 981059
E-mail: infocenter@finance.gov.lb
Website:
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