How stable is the Lebanese Financial Market?

The global recession has affected more or less the economy of all leading nations of this planet. During this global crisis, the economy of Lebanon has shown a prominent rigidity to weather it successfully. The domestic economy of Lebanon didn’t have any direct openings to the affected financial global market or products. As a result, it hasn’t undergone any considerable impact of current global crisis.

Two main challenges that Lebanon faced were- the huge amount of public debt and the large financial requirement of the contemporary Government. But the smart and prudent economical policies helped the country to overcome the external effects. These meticulous policies covered three aspects:

- A prudent policy of interest rate,
- Utilization of primary surpluses,
- Stringent supervision of Economy.

The primary surpluses considerably have been reducing the ratio of debt to GDP by approximately 20% for last three years. The Government has retained an optimized rate of interest for backing the continuation of deposit inflow, transformation of dollar into Lebanese pound (or dedollarization). The government has also emphasized on the empowerment of the country’s external position among the leading nations. A strict supervision of economy protected the domestic banks from interacting with the outer global markets, affected international banks and foreign productions.

Still there are some challenges that demand the immediate attention of Government like boosting the international reserves, proper fiscal consolidation (as it lowers the monetary stabilization cost) and powerful donor support.

The above stated policies contributed a lot to retain confidence in the economy of Lebanon even during this acute recession. The deposit inflows haven’t been affected except the initial pause. The rate of transformation from dollar to Lebanese pound has grown gradually. The banking services have passed through the global crisis with ease. The BDL (Central Bank) has succeeded to acquire international reserves without facing much difficulty. During the Lehman failure, Eurobond spreads reached a peak level but have been come down astonishingly after that.

The high rate of currency transformation has stabilized the local currency and the economic growth of Lebanon is still continuing remarkably despite the struggle of the leading nations to overcome the impact of the global recession.