BEIRUT (Reuters) – Bank deposits in Lebanon have risen by 4 percent on the year, Central Bank Governor Riad Salameh said on Thursday, and he maintained his economic growth outlook for 2018 at 2 percent.
In July Salameh had said he expected bank deposits to grow by more than 5 percent in 2018.
In October the World Bank and the International Monetary Fund (IMF) halved their growth outlook to one percent for Lebanon, where public debt is about 150 percent of gross domestic product.
“Lebanese banks have succeeded in maintaining foreign exchange inflows into their sector supported by (the central bank),” Salmeh said in a televised speech at a Beirut economic conference.
With growth low and traditional sources of foreign exchange – tourism, real estate and foreign investment – undermined by years of regional tension, Lebanon increasingly relies on dollars expatriate Lebanese deposit in local banks.
The banks buy government debt, which finances the country’s eye-watering public debt and twin deficits.
The central bank also brings in dollars through complex financial operations with local banks to boost foreign currency reserves needed to defend the Lebanese pound’s peg to the dollar.
However, deposits have been growing at a slower rate since war broke out in neighbouring Syria in 2011, and deposit growth rates are closely watched.