Update (20/01/2015): It appears that the government won’t be fixing any prices and the prices will drop by more than 1,000 Lebanese Lira tomorrow.
Gas prices have dropped by over 13,000 Lebanese Liras from last year until now in Lebanon, and they should normally continue to drop since oil prices are plunging worldwide. However, it appears that the Lebanese authorities and the concerned ministries want to put an end to this drop and set a minimum price for the tank. Moreover, there are talks that they might re-introduce a fixed amount that is related to internal distribution and governmental taxes and that was abolished by Gebran Bassil a couple of years ago.
Knowing that the prices are related to international market fluctuations, I don’t think it’s fair for the government to set a minimum price. If they want to compensate for the oil companies and gas stations’ losses, they should also set a maximum price and relieve the Lebanese from high fuel bills. If the government wants to take action and help oil companies by fixing the price of 20 liters of gas at 22,000, they should also prioritize the average citizen and set a maximum price.
On another note, I wonder if the drop in gas prices has anything to do with the increase in traffic lately.
Update: BDL governor Riad Salameh denied some media reports that the Americans had urged him during the World Bank and International Monetary Fund meetings in Washington to reduce the number of banks operating in the country from 72 to 25 through consolidations and mergers. [Source]
How is it possible to reduce the number of banks from 72 to 25 in just five years?
The World Bank and the U.S. Treasury Department proposed to Central Bank Governor Riad Salameh to reduce the number of working banks in Lebanon from 72 to 25 within a period of five years.
According to al-Liwaa newspaper published on Tuesday, the proposal came in light of the tough measures imposed on transactions, especially those conducted by expatriates. The newspaper said that the reduction in bank numbers would give the banking sector the needed boost and increase the capital of national banks by merging their branches. [Link]
I was reading on Liberation that the French are more pessimistic about their economic future than Palestinians, then I noticed Lebanese feel the same.
There’s no doubt that the economic situation is bad in Lebanon, but I doubt that it is worse than Palestine. The countries that are most optimistic about their future economic situation are China, Peru, Vietnam, Senegal, Nigeria, India and Colombia.
Check out the full study [Here].
More than half of Greeks (53%) anticipate economic conditions worsening over the next 12 months, (another 26% expect the Greek economy to remain the same, which, in a nation where the economy shrank by -3.9% in 2013 is hardly a vote of confidence). In addition, 48% of the French expect their economy to deteriorate, as do 46% of Lebanese and 44% of Palestinians. Greek pessimists, however, may be pleasantly surprised: the IMF foresees the Greek economy improving from 0.6% growth in 2014 to 2.9% in 2015. Similarly, while less than half the Lebanese expect more hard times, the IMF forecasts Lebanon’s economy to accelerate from 1% growth in 2014 to 2.5% in 2015. [Pew]
According to the 2013 Global Competitiveness Report, Lebanon ranked 116th out of 144 in terms of basic requirements, 125th out of 144 in terms of institutions, 135th and 32nd (out of 144) in terms of macroeconomic environment and health/primary education respectively.
The most problematic factors for doing business in Lebanon are:
– Inadequate supply of infrastructure
– Inefficient government bureaucracy
– Government instability/coups
– Policy instability
– Access to financing
– Insufficient capacity to innovate
– Poor work ethic in national labor force
– Inadequately educated workforce
– Restrictive labor regulations
– Poor public health
– Tax regulations
– Tax rates
– Crime and theft
– Foreign currency regulations
You can check out the full report [Here].
Migrants to the United States are responsible for sending almost a quarter of the global total of intentional remittances. While the countries with the biggest flows are Mexico, India and China, Lebanon is in 14th position and sent over 1.5 Billion Dollars in the year 2012.
The map was done by Pew Research Center based on data from the World Bank.
Read the full article [Here].
Rand Ghayad is a Lebanese Economist who will shortly be receiving his Ph.D. in economics from Northeastern University. He published a paper back in 2012, along with his doctoral adviser William Dickens, which offered a new take on long-term unemployment and found that “the long-term unemployed were qualified for jobs but were ranking lower than other potential candidates because of the length of time they had been out of the workforce”.
Rand’s paper was described by the Atlantic Post as “pioneering”, and was cited recently by US Senator Rand Paul, to which Ghayad responded. More importantly, this new theory on unemployment has caught the attention of US president Barack Obama who invited Ghayad to attend a meeting by Gene Sperling, Obama’s National Economics adviser.
For those interested in economics and the topic of unmeployment, here’s a [Link] to Ghayyad and Dickens’ paper, which was originally written for the Federal Reserve Bank of Boston.
As a result of this downgrade, S&P lowered as well the ratings of three Lebanese Banks, Bank Audi SAL–Audi Saradar Group, BankMed s.a.l., and Blom Bank, from B to B-. What S&P is basically telling us is that we need to form a freaking government that is capable of running the country or else we’ll be downgraded further.
It is worth noting though that the decision has no direct impact on the Lebanese banking sector as the banks were downgraded automatically because of the state’s sovereign rating and not their performance.
Standard & Poor’s lowered its long-term foreign and local currency sovereign credit ratings on Lebanon from B to B- keeping a negative outlook, the ratings agency said on Nov 1. S&P kept Lebanon’s short-term ratings at B. Political risk in Lebanon has risen as no new government has been formed for over six months while sectarian tensions are rising, fuelled by the spill-over from Syria, S&P underscored.
After nearly three years of weak GDP growth, dented by an internal political environment not conducive to policymaking, public finances have deteriorated and the debt-to-GDP ratio is again trending upward, S&P said.
The influx of Syrian refugees, which now account for nearly 25% of Lebanon’s population, will strain the country’s resources and public finances while potentially destabilising Lebanon’s demographic balance, S&P warned. But Lebanon’s ratings remain supported by the banking sector, which finances the government’s borrowing requirements. The latter benefit from steady deposit inflows and cash reserves, S&P noted. [Link]
A negative rating action on Lebanon would trigger a similar action on the three banks. S&P could therefore lower the ratings on the three banks further if the political and economic situation deteriorates to the point where it staunches domestic deposit growth or external inflows to the banking system. Both are important sources for funding the government’s fiscal deficits and external requirements, as well as for maintaining confidence in the Lebanese pound’s peg to the dollar.
Conversely, it could revise the outlook on the three banks to stable should there be a breakthrough on the domestic political front.
Owing to the close links between Lebanese banks’ creditworthiness and that of the sovereign, specific factors relating to each of the three banks that would prompt a change in the respective ratings appear limited at this stage. [Link]
Lebanon ranked 111th in the “Ease of Doing Business” 2014 report, way behind the UAE which topped the Arab World and jumped three slots this year to land at No. 23 in the world.
Here are the rankings of all the Arab countries mentioned in the report:
26- Saudi Arabia
What does Doing Business measure and who performs well?
Through its indicators Doing Business measures and tracks changes in the economies that have no regulations in the
area being measured or do not apply their regulations (considered “no practice” economies), penalizing them for lacking appropriate regulation.
The economies ranking highest on the ease of doing business therefore are not those with no regulation but those whose
governments have managed to create a regulatory system that facilitates interactions in the marketplace and protects
important public interests without unnecessarily hindering the development of the private sector—in other words, a regulatory system with strong institutions and low transactions costs (table 1.1). These economies all have both a well-developed private sector and a reasonably efficient regulatory system that has managed to strike a sensible balance between the protections that good rules provide and the need to have a dynamic private sector
unhindered by excessively burdensome regulations.
You can download the full report [Here].
The Mikati and Hariri families alone have 15% of the all the private wealth. Read more about it [Here].
At least 48 percent of Lebanon’s privately-held wealth is concentrated in the hands of some 8,900 citizens — just 0.3 percent of the adult population — according to calculations based on a new report. The nation’s staggering wealth inequality is detailed in Credit Suisse’s Global Wealth Databook 2013, released last week. The distorted wealth figures help to push the country’s Gini coefficient, a measure of inequality, to 86.3 percent — the fourth highest globally behind Russia, Ukraine and Kazakhstan (see chart, below left).*
While Credit Suisse did not directly publish how much wealth is in Lebanese millionaires’ hands, Executive was able to estimate a lower bound based on the report and Forbes magazine’s list of billionaires. Lebanese worth more than $1 million own at least 48 percent of the country’s wealth (see chart above). This figure, however, is a minimum estimate. It also implies that the rest of the country owns less than 52 percent of private wealth, valued at some $91 billion.
The cost of living in Beirut is higher than Dubai yet the local purchasing power in Dubai is 185.86% higher than in Beirut. I looked at the items mentioned in the comparison between the two and they are generally accurate. I would add though to the utilities the generator monthly expenses which are almost twice as much as the electricity bills we pay.
Consumer Prices in Dubai are 6.55% lower than in Beirut
Consumer Prices Including Rent in Dubai are 19.05% higher than in Beirut
Rent Prices in Dubai are 76.17% higher than in Beirut
Restaurant Prices in Dubai are 14.15% lower than in Beirut
Groceries Prices in Dubai are 7.64% higher than in Beirut
Local Purchasing Power in Dubai is 185.86% higher than in Beirut