Lebanon’s Central Bank Chief, Riad Salameh, said in an interview with the news agency Al-Safir that the civil war in Syria has halved the growth rate of Lebanon’s economy.
His statement came just after the International Monetary Fund (IMF) blamed Lebanon’s government for the country’s slowing economy. The annual growth rate has fallen to be between 2 and 3 percent, while the government states that the growth rate in 2011 was 5.2 percent.
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Salameh said, “The situation in the region, especially the events in Syria, affect the Lebanese economy and banking activity.”
He added that annual inflation is around 4.5 percent, but believes that will soon rise due to wage hikes and alterations in the government’s spending patterns. He also expects that bank deposits will increase by 7 to 9 percent and that the number of loans will rise by 10 percent.
Salameh continued, “These are good indicators. And (bank) profits are the same as last year despite the difficulties experienced in the region.”
The IMF maintains that Lebanon’s economic downfall is predominately due to the inappropriate reactions and weak policies of the government, and that the Syrian war had only a small impact on the economy.
Many businessmen and economists agree with the IMF assessment, saying that the government has failed to reform state finances, make improvements in the infrastructure, and stimulate economic growth.
The rise of sectarian tensions has contributed significantly to the incapacitation of the government, as well as ongoing oil disputes and other sources of infighting amongst ministers.