Salemeh warns against increasing budget deficit

04Feb09

When governor of  Banque Centrale Riad Salemeh talks, economists tune in and take note.

We should realize that the elements which cause the weakness of the monetary situation are related to the budget deficit and public debt,” – Govenor Riad Salameh said.

riad_salemehSalameh estimated Lebanon’s GDP’s growth at 7 percent while inflation ranged between 7 percent to 10 percent last year. He added that customer deposits in Lebanese banks grew by $11 billion in 2008, while the profits of these banks increased by 30 percent.

The 2009 draft budget, which is yet to be approved by the Cabinet and Parliament, projects expenditures at close to $10 billion, an increase of 35 percent compared to the 2008 budget, and revenues at LL11.1139 trillion, an increase of 33 percent. The budget deficit for 2009 is projected at LL4.413 trillion, or 28.37 percent of spending and 9.41 percent of the country’s GDP.

He also said that the balance of payments recorded a surplus of $3.46 billion in 2008.

These positive indications are continuing. The Central Bank in January of 2009 purchased $1 billion in US bills which shows that the monetary situation is stable,

Salameh stressed that unlike many emerging countries such as India, Russia and South America; Lebanon has overcome the negative effects of the global credit crunch.

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