MUTUALLY BENEFICIAL
Mutual funds on the market in Lebanon are on the rise in both number and value according the latest data from Banque du Liban, Lebanon’s central bank. Over the course of 2009 the number of marketed funds increased by a whopping 42 percent from 387 to 551. The total amount of licensed funds, on and off the market, hit 1,418 at the end of last year. In turn, the amount of mutual fund subscriptions also increased during 2009 with $837 million present in funds on the market at the end of the year, a 14.5 percent increase on the figure at the end of 2008. The distribution in investment was mostly allocated to securities funds that constituted 65.4 percent of the total, followed by fixed income funds (26.4 percent) and money market funds (8.1 percent). Banks took the lion’s share of subscriptions with 93 percent of the total, with financial institutions making up the rest. The 21 derivate funds on the market in 2008, perhaps unsurprisingly, were not present on the market last year.
Firepower fund
A border clash between the Lebanese Armed Forces (LAF) and the Israeli army last month which left two Lebanese soldiers, one Lebanese journalist and one senior Israeli officer dead [See page 12] has prompted the Lebanese government to open a fund in order to bolster its army’s capabilities. The announcement of the fund’s inception was made by Defense Minister Elias Murr who stated that the army would be seeking donations, in part, from the Lebanese Diaspora. Murr also stated that he and his father, a legislator and former interior minister, have already deposited $670,000 in the fund, which is housed at BDL. The move comes on the heels of a decision by the chairman of the United States House Foreign Affairs Committee, Howard Berman, who used his position to suspend $100 million of scheduled aid to the LAF in the aftermath of the border clash. The decision was ostensibly due to the fact that a US-made sniper rifle on loan to the LAF since the 2007 Nahr Al Bared siege was used to kill the Israeli commando during the border skirmish, according to a United Nations source who asked for anonymity. Murr criticized the announcement, saying that any party that seeks to aid the LAF should do so without preconditions. The US has provided some $720 million to the Lebanese army since the July 2006 war between Israel and Hezbollah.
BlackBerry under the gun
Following an announcement that the United Arab Emirates and Saudi Arabia would ban emails sent via BlackBerry devices due to security concerns, Lebanon’s official Telecom Regulatory Authority (TRA) announced that it had “launched a technical, commercial and legal study covering data services used by the Smartphones in Lebanon, such as BlackBerry and others in order to assess their conformity with the laws and regulations applied in Lebanon.” The TRA also stated that once the study was complete any cases of non-compliance would be addressed by the authorities by “taking the necessary measures.” Nevertheless, on August 6 the TRA also stressed that it “hasn’t taken any decision to stop any of the BlackBerry services.” The Telecom Ministry also weighed in, saying that it was preparing for negotiations with BlackBerry’s Canadian-based manufacturers Research In Motion, saying that negotiations could take up to two months. Lebanon has recently arrested several public telecommunications employees on charges of espionage and spying for Israel. In other telecom news, the Telecom Ministry announced that a new mobile phone tariff scheme for off-peak hours will come into force this month, decreasing the cost of phone calls and SMS messages by time-of-day usage. From 10:00 pm to 12:00 am, phone calls will cost 20 percent less (29.6 cents per minute instead of 37 cents), and the cost of SMS messages will also be reduced by 20 percent (7.2 cents instead of 9 cents.) From 12:00 am to 8:00 am the cost of phone calls and SMS messages will be reduced by 40 percent. Lebanese mobile phone provider MTC also announced that it would start issuing mobile phone numbers starting with ‘76’ because they had no more ‘03,’ ‘70,’ or ‘71’ codes to issue.
A GOOD HALF
The country’s deficit saw a remarkable decline during the first half of the year according to data released by the finance ministry last month. The official data shows that the total deficit from January to June came to some $917 million, constituting a 41.2 percent drop from $1.56 billion registered over the same period in 2009. The difference was attributed to an increase in revenues of $86.2 million to $4.34 billion, and a drop in expenditures of 9.6 percent year-on-year to reach $5.26 billion. In the first six months of the year, tax revenue increased by 16.2 percent to hit $3.54 billion, with $1 billion coming from value added tax. A major contributor to decreasing expenditures was a 44 percent drop in transfers to Electricite du Liban which came in at $563 million in the first half of the year, due primarily to a 56.2 percent decrease in expenditure on hydrocarbons, which reached $439 million. Gross public debt increased by a mere $12.6 million to maintain its level this year at $51 billion by the end of June, with interest payments over that time at $1.91 billion.
Export credit up, import down
According to figures released last month, in 2009 Lebanon registered the third highest value of export credit insurance amongst the 12 Arab countries monitored by the Arab Investment and Export Credit Guarantee Corporation (AIECGC), the Arab League’s financial institution that provides insurance to member states. The ranking represents $77 million in export credit contracts, accounting for 13 percent of the total of $592.3. The figure is a decrease of 10.36 percent and $8.9 million on the previous year. Saudi Arabia registered the highest amount with $247.2 million, or 41.7 percent of the total. Lebanon also found itself in 13th place out of 17 countries surveyed by the AIECGC in terms of credit insurance for imports with just $5 million in contracts of this nature. The drop represents a loss of five ranks and $11.8 million on 2008.
Lebanon enters oil race
On August 17 Lebanon’s parliament unanimously passed a law that will allow oil and gas exploration to take place off its coast. Energy Minister Gebran Bassil stated that exploration could start as early as 2012. The law stipulates that contracts will be allotted under a production sharing agreement between the government and international oil companies, which will be invited to a conference to begin the process in October, according to Bassil. The law also calls for the creation of a regulatory authority as well as an exploration and production oversight committee. Notably, the law does not detail when a sovereign wealth fund will be created or who will manage it. The United States Geological Survey estimates that the Levant Basin — shared by Lebanon, Syria, Cyprus, Israel and the Occupied Palestinian Territories — contains a technically recoverable amount of 1.7 billion barrels of oil and 122 trillion cubic feet of gas. Technically recoverable resources are not necessarily equal to those that can be acquired for sale. US-based energy firm Noble Energy, which already operates in two fields offshore of Haifa, has announced plans to begin drilling in the Leviathan field close to the border with Lebanon at the end of 2010. Lebanon has not officially demarcated its borders with Israel since it is technically at war, and thus there is a possibility that the fields Israel is developing extend into Lebanese territory.
PORTS PICK UP PACE
Port activity in both Beirut and Tripoli is continuing to expand, with the latter growing considerably faster than the capital’s dockyard. Freight activity in Beirut saw a year-on-year increase of 5.8 percent in July to reach some 3.87 million tons, while Tripoli’s anchorage saw 23.43 percent growth to hit 656 thousand tons during the first half of the year. The number of vessels docking in Beirut fell 2.57 percent year-on-year in July to 1,366, as did the number of containers, which saw a contraction of 6.15 percent over the same period. Nevertheless, the capital’s port still saw a marginal year-on-year increase in revenue of 4.35 percent to reach $96 million at the end of July. Tripoli’s year-on-year port revenue in June increased 35.73 percent to $4.88 million.
