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ANNUAL REPORT
2000
Chairman’s
Letter
History
Vision & Values
Board of
Directors & Management
Economic Outlook
Report of Independent Auditors
Balance Sheets
Statements
of Income
Notes to Financial Statements
Branches
Correspondents
ECONOMIC OUTLOOK
During 2000, the
Lebanese economy registered a continuous decline in the main economic
indicators relative to the previous year, a confirmation of a long-lasting
recession. The deficit in the balance of payments, coupled with a
deterioration in public finance, adversely affected the different sectors of
the economy.
As a result, we have witnessed a stagnation in GDP and a foreign trade
deficit of USD 5,514 million, due to a very limited increase in imports and
exports by 0.3%, and 5.6%, respectively. The downward trend in the
construction sector is a primary indicator of the regression of private
investment. Construction permits decreased by 16%, and cement deliveries by
11%, relative to 1999. According to figures released by the Ministry of
Finance, the net total public debt attained LBP 35,034 Billion, an increase
of 17.7% over 1999 figures.
In the year 2000, internal public debt increased by LBP 3,153 Billion to
reach LBP 24,530 Billion, and external public debt increased by USD 1,430
Million to reach USD 6,968 Million. External public debt represents 30% of
net total public debt. These developments prove that the necessity to adopt
a tight monetary policy and reform measures is mandatory in order to return
to a sustainable GDP growth. The prevailing unstable political situation in
the region maintained pressure on the majority of markets, and consequently
compelled the monetary authorities to refrain from decreasing interest rates
on Treasury Bills, maintaining them at almost the same levels of the
previous year.
At the end of December 2000, yields on Treasury Bills recorded 11.18% and
12.12% on the three month and six month categories respectively, 13.43% and
14.64% on the one-year and two-year categories, respectively. The Banking
sector registered an increase in the banks' total assets by 11.3% from LBP
60,971 Billion in 1999 to 67,888 Billion in 2000.
The structure of the consolidated balance sheet of banks in Lebanon in 2000
shows an increase in foreign currency deposit ratio from 62% to 67%, a sign
of an increase in dollarization if compared to 1999 figures. The difficult
operating conditions, the pressures on spreads, the decrease in the average
returns on Treasury Bills, and in the absence of alternative sources of
revenue, banks’ consolidated profits regressed by 20% in 2000, according to
Central Bank statistics. This should not be explained as, due to the
economic strain banks are cutting back on their operations, on the contrary,
we observed that during these periods of constraints, banks are preparing
themselves for the future, confident that the economic recession will not
last forever. Consequently, a complete restructuring process is taking
effect and new strategies are in place.
The banking sector is, therefore, becoming more proactive through the
adoption of up-to-date operating procedures, the upgrading of their
technical and electronic services, the recruitment of professionals, and the
launch of new products. The strong tensions in the financial sector will
definitely lessen as soon as the political uncertainties in the region, and
the postponement of the national reconciliation are resolved. Finally, the
return of confidence to the private sector is subject to the success of the
government's new economic reforms.
Chairman’s
Letter
History
Vision & Values
Board of
Directors & Management
Economic Outlook
Report of Independent Auditors
Balance Sheets
Statements
of Income
Notes to Financial Statements
Branches
Correspondents
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