Interest rates on the rise

The Lebanese banking sector has been tested against internal and external shocks many times through recent decades, and it has been tested yet again this year. The sector still enjoys high liquidity ratios, enabling the banks to weather economic turmoil, while the sector as a whole has also been steadily reducing its heavy government exposure — a positive trend amid the numerous challenges Lebanon’s commercial banks have faced in 2012. The sector remains the main source of financing for the Lebanese government but its exposure to the highly indebted sovereign has been on a declining trend since 2006. Banks’ claims on the public sector constituted 21 percent of their total assets at the end of 2011, down from 28 percent at the end of 2006. Banks hold around $29 billion, or close to 54 percent of the gross public debt, which stood at $54 billion at the end of 2011.