Printer Friendly

Lebanon's trade deficit widens to over $10 billion.

Summary: BEIRUT: Lebanon's trade deficit in the first nine months of 2010 reached $10.172 billion, the highest in the country's history, with economists attributing this increase to the continuous rise in personal loans offered by Lebanese banks. "The increase in personal loans improves the consumption power of people, and in Lebanon's case, our citizens prefer to buy imported products

BEIRUT: Lebanon's trade deficit in the first nine months of 2010 reached $10.172 billion, the highest in the country's history, with economists attributing this increase to the continuous rise in personal loans offered by Lebanese banks.

"The increase in personal loans improves the consumption power of people, and in Lebanon's case, our citizens prefer to buy imported products," economist Elie Yashoui told The Daily Star Monday.

Yashoui said that the share of personal loans of the total loans given to the private sector is higher than the share of loans offered to the manufacturing industry. "Personal loans' share of total loans offered to the private sector reached 20 percent, which is equivalent to approximately $6-7 billion," he said.

He believes that banks should control the amount of personal loans and increase loans offered to companies. "How do banks give money to people before taking care of the companies employing these people?" he asked.

"What if these companies end their operations. What would be the fate of these loans?" Yashoui added.

"I recommend a revision of the banking policy in Lebanon," he said.

Yashoui noted that one of the most important factors leading to the expansion in the country's balance-of-trade deficit is the increase in the price of oil. "When the barrel's price reached $25, our oil imports bill amounted to more than $2 billion but it exceeds $5 billion today," he said.

According to the weekly market watch issued by Credit Libanais, Lebanon's Higher Customs Council conveyed a $630 million annual expansion in Lebanon's balance-of-trade deficit to $10.172 billion in the first nine months of 2010, in comparison with $9.524 billion a year earlier. It reported that the total exports rose by 23.29 percent to $3.017 billion, accompanied by a 10.01 percent increase in imports to $13.189 billion on a nine-month basis.

On a monthly basis, it added, Lebanon's balance-of-trade deficit fell by 10.29 percent to $1.020 billion in September 2010, down from $1.137 billion a month earlier. The report said that imports dipped by 9.59 percent to $1.310 billion from $1.449 billion in August. Moreover, exports, concurrently, lost 7.05 percent to $290 million in the month of September, down from $312 million in the month of August.

Yashoui criticized the absence of a money market in Lebanon. "The money market is a market where the price of money is determined by the law of supply and demand, but in Lebanon we have a centralized decision with regard to fixing exchange rates," he said.

He added: "The price of money should be determined by the market, which means that we should take into consideration the needs of the economy to invest, consume, and achieve better growth."

However, with the absence of the law of supply and demand, he continued, the needs of the economy to create jobs and to grow in a better way are ignored. "You will then be concentrating on the exchange rate of the lira or on the interest rate that you deem necessary to set up regardless of the needs of the economy," he said.

Yashoui believes that the lira should have been pegged to the a euro long time ago and not only to the US dollar.

Economist Louis Hobeika said that Lebanon has been relying on imports for a long time and has never been successful in diversifying its local production which would have contributed in increasing exports. "We are not diversifying our economy and the basket of goods produced is very limited in Lebanon and that's why we are not able to increase our exports," he said.

"Our imports mostly come from Europe and the euro went up, contributing to this high deficit," he added. However, Hobeika said he is not worried about the deficit in trade because "it is an ongoing problem."

Copyright 2009, The Daily Star. All rights reserved.

Provided by Syndigate.info an Albawaba.com company
COPYRIGHT 2010 Al Bawaba (Middle East) Ltd.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2010 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:The Daily Star (Beirut, Lebanon)
Geographic Code:7LEBA
Date:Nov 2, 2010
Words:720
Previous Article:Sidon schools mark birthday of former PM Rafik Hariri.
Next Article:White House restaurant shooting suspects still in custody.
Topics:

Terms of use | Privacy policy | Copyright © 2018 Farlex, Inc. | Feedback | For webmasters