Paying the bill
Lebanon’s banks made an uncharacteristically political move last month when they decided to fund Lebanon’s contribution to the controversial Special Tribunal for Lebanon. The move follows a decision by Prime Minister Najib Mikati to fund the tribunal in late November through the Higher Relief Council. The decision to pay Lebanon’s share of approximately $32 million was announced by the Association of Banks in Lebanon (ABL) and will see the country’s top 12 banks, which sit on its board, put up the money. Each bank will pay a share proportionate to their assets, according to the ABL. The ABL justified the move by saying that it would protect depositors’ funds, maintain political stability and help the investment climate in the country. The banks on the ABL’s board are Byblos Bank, BLOM Bank, Bank Audi, BankMed, Fransabank, Banque Libano-Française, Crédit Libanais, Bank of Beirut, SGBL, BBAC, the Lebanese Swiss Bank and Fenicia Bank. Hezbollah criticized the move to fund Lebanon’s portion of the tribunal but said it will not create a political issue out of it.
Digging deeper deficits
Lebanon’s trade balance (exports minus imports) and balance of payments (or BOP, the measure of money coming in and out of the economy) have hit their greatest deficit levels to date, according to the latest data released by customs and the Banque du Liban (BDL), Lebanon’s central bank. By the end of October the trade deficit had widened to $13.35 billion, up 18.4 percent year-on-year, even while exports increased by 3.3 percent to $3.6 billion during the period. In October alone, the trade deficit was $2.2 billion, 107 percent higher than the same month in 2010. The BOP deficit increased accordingly to $2.13 billion in October, compared to a surplus of $2.8 billion in 2010. October’s BOP deficit, $589.8 million, was up from September’s $301.7 million figure. The two largest factors weighing into the BOP were the BDL’s net foreign asset surplus of $1.8 billion, and the $3.9 billion deficit in the payments of commercial banks and financial institutions.
Minimum wage, maximum anger
Much to the ire of trade unions, Labor Minister Charbel Nahas and his Free Patriotic Movement party, the cabinet voted last month to amend the minimum wage decree that was previously rejected by the Shura Council, Lebanon’s highest court. After a debate that has lasted months, the cabinet decided to increase the minimum wage from LL 500,000 ($331.67) to LL 600,000 ($398.00) and institute various other raises on other brackets. Teachers then held a strike shortly after the decision, which they called “humiliating”. The General Labor Confederation (GLC), the country’s largest labor union, also called for a nation-wide strike on December 27. When the measure came to a vote in cabinet, some of the labor minister’s recommendations were incorporated and the minium wage was raised to LL868,000 ($575.78), which includes LL 236,000 in transportation allowances added to the basic salary. Salaries between LL 1.5 million ($995) and LL 2.5 million ($1,658) will get a further 10 percent raise (above the intial 18 percent) while with anything above LL 2.5 million rises by LL 370,000 ($245). The raise is retroactive on a monthly basis as of December 1, 2011. Prime Minister Najib Mikati stated that the raise may hurt the economy and the GLC was considering calling off the strike as Executive went to print.
Dropping less calls
The typical Lebanese annoyance of having your phone conversation cut short because of the country’s infamously low quality cellular phone services is set to change in the next eight months, according to the telecommunications ministry. Last month the ministry unveiled a plan to invest some $110 million in a project to upgrade and modernize the country’s two cellular networks. The National Quality of Services plan will be implemented by the two privately owned operators Alfa and MTC, and could start showing results in as little as two to three months, according to the ministry. The first phase of the plan was to determine the geographic and technical weakness of the networks and as such the ministry has committed to purchasing 400 new antennas to support areas where reception is weak or non-existent. A further 20 mobile stations will provide backup support in densely populated areas. The ministry will also buy around 120 repeaters to install in areas where people have installed their own equipment to enhance signal strength.
Eating out
Known for their ability to throw a party and have a good time, the Lebanese spend around one-seventh of their income on eating out, according to a new study. A survey released last month compiled by the global credit card company MasterCard showed that the Lebanese spend an average of $105 per month on dining out and that 20 percent of consumers spend between $101 and $200 every month on restaurants. The highest spenders by age bracket were seen to be seniors over 55, while consumers with an annual household income over $30,000 spent around $169 every month eating out. The survey said that more than half of respondents eat out on average five times a month at mid-range family restaurants or cafes and six times per month at fast food restaurants; 32 percent went to food courts while 16 percent went to fine dining establishments in both hotels and standalone restaurants.
Labor makeup
New figures released by Lebanon’s official statistics agency have shed light on the makeup of employment across the nation. According to the Central Administration for Statistics, which used the International Labor Organization’s standards to measure the job market, Lebanon’s employment rate stood at 44.6 percent in 2009, the latest year studied by the agency. Of the total, 77 percent of the labor force is male and 23 percent is female. Around a quarter of workers were shown to hold university degrees, while another quarter had completed intermediate-level education, with 4.2 percent of workers deemed to be illiterate. The survey showed that 36.9 percent of workers are employed in the services sector, 27 percent in trade, 12.1 percent in industry, 8.9 percent in construction, 6.3 percent in agriculture and just 2 percent in financial intermediation and insurance.
Tentative growth prospects
Barclays Capital has forecast Lebanon’s gross domestic product growth at 3.6 percent this year after an estimated 1.8 percent growth in 2011. The firm said that an escalation of sanctions against Syria would pose downside risks for any economic growth and hurt the economy due to close economic ties between the neighboring countries. It also cautioned that the capital inflows enjoyed previously could be a thing of the past if the situation in Syria continues to worsen. The firm added that if the budget is passed as is presented by the finance ministry it would reverse previous fiscal gains due to higher and haphazard spending. It indicated that this increase in spending might not be absorbed by the ministries, which would entail a waste of public funds and inefficient spending. Barclays also cautioned that if the economic situation continues to deteriorate, this year could see political risk spill over onto banks’ balance sheets. It urged the government to support an orderly budgetary process, something that has not occurred since the last budget was passed by parliament six years ago. The government has until the end of this month to pass a yearly budget under the constitution. As Executive went to print the cabinet had yet to pass its version of the budget onto the parliament for debate and ratification.
