Lebanon's PM calls for Arab banks to finance reconstruction
13 May 2017
BEIRUT: Prime Minister Saad Hariri said Friday that Arab banks should play a bigger role in the reconstruction drive in the region. “First, the size of the reconstruction processes in the Arab world requires more openness and cooperation between all Arab banking sectors and all Arab banks from all countries,” Hariri told participants in a conference on financing reconstruction in Arab states organized by the Union of Arab Banks.
“Second, the size of the reconstruction processes requires us to join the global trend of activating partnerships between the public and private sectors, particularly the process of developing infrastructure as the pillar of any economic growth.”
This is not the first time a senior Lebanese or Arab official has called on banks to help in financing the reconstruction of Arab states that have witnessed wars and conflicts.
“The forum’s title, ‘Financing Reconstruction – In the Aftermath of the Arab transformations,’ summarizes our vision of the future based on turning challenges into opportunities.
“Today our Arab countries are witnessing crises and challenges on all political, security, economic and social levels,” Hariri added.
Hariri shared with the participants Lebanon’s experience in rebuilding the country and the role of the banks in financing reconstruction projects.
“There are many theories on how all these crises would end. I do not want to plunge into these theories, with all due respect, but I want to propose an approach and call it ‘the Lebanese approach’ to these crises. The Lebanese way in approaching issues stems from the fact that the Lebanese people experienced all these crises, experiences and calamities 30 years before the rest of the region,” the prime minister said.
He added that Lebanon experienced all types of crisis: internal wars, foreign interference, militias, occupation, guardianship, destruction, displacement and all kinds of atrocities.
“In the end, we discovered two things: We only have each other and we only have our country. Thus, we decided to live together and we rebuilt our country. In the end, everyone, in Syria, Iraq, Libya and Yemen will reach the same conclusion: They will live together and rebuild their countries sooner or later,” Hariri said.
He estimated the cost of reconstruction in the war-torn Arab countries at hundreds of billions of dollars.
“Here lies the Lebanese way approach, based on turning the crisis into an opportunity and calamity into hope. Here also appears the fundamental and pivotal role of your sector, the Arab banking sector,” Hariri explained.
The prime minister praised Lebanese banks for their vital role in helping the local economy.
“The Lebanese banking sector has always been the main leverage and supporter of the national economy in the most difficult circumstances and a factor of confidence and reassurance to all Lebanese. I want to pay a special tribute to the Central Bank and its governor, Riad Salameh, and all the Lebanese banking leaders who faced the local challenges with efficiency and are enhancing the confidence in Lebanon through their commitment to international rules and regulations,” Hariri said.
For his part, Salameh shed light on the state of the Lebanese economy and pound during and after the war.
“The war led to higher interest rates and the collapse of the currency. In 1985, interest on the Lebanese pound reached 37 percent and in 2016 returned to 5.35 percent. As for the dollar, the rate climbed from LL2 to LL35, and all the way to LL2,420. Lebanon relied on external support, both Arab and international, which was the most important source of funding for the banking sector and the [Central Bank],” the governor said.
He added that Lebanon sought to rebuild the state, reorganize revenues and stabilize the Lebanese pound to protect the purchasing power that was lacking during the war.
“The minimum wage in dollars reached $18 per month in 1987 and today it is about $450 a month. The economic damage and costs of the three most important wars in the Middle East and North Africa – those in Libya, Yemen and Syria – are estimated at hundreds of billions and are certainly an opportunity to invest when peace is achieved.
Joseph Torbey, the president of the Association of Banks in Lebanon, also expressed the interest of Arab banks in financing reconstruction in some regional states.
“The cost of infrastructure reconstruction in the Arab countries destroyed by wars and conflicts according to ESCWA amounts to about $1 trillion. The net losses in economic activity exceeded $600 billion, equivalent to 6 percent of the GDP in the Arab region, and led to a deficit in the public finances of these countries of around $250 billion between 2011 and 2015,” Torbey said.
At the end of the conference, the organizers handed Hariri a special plate to honor his achievements and help to the banking sector.© Copyright The Daily Star 2017.