LEBANON: OPIC/CITI EXTEND ADDITIONAL LOAN FACILITY TO

UNCLAS SECTION 01 OF 02 BEIRUT 000779 SIPDIS SENSITIVE STATE FOR NEA/ELA AND EEB/IFD/ODF STATE PASS USTR FRANCESCKI STATE PASS USAID LAUDATO/NANDY/SCOTT TREASURY FOR PARODI/BLEIWEISS/AHERN USDOC FOR 4520/ITA/MAC/ONE NSC FOR SHAPIRO/MCDERMOTT E.O. 12958: N/A TAGS: ECON EFIN EIND ENRG PGOV LE SUBJECT: LEBANON: OPIC/CITI EXTEND ADDITIONAL LOAN FACILITY TO BYBLOS BANK (ECONOMIC WEEK IN REVIEW, JULY 6 - 12, 2009) CONTENTS -------------- -- OPIC/CITI EXTEND ADDITIONAL LOAN FACILITY TO BYBLOS BANK -- CENTRAL BANK FOREIGN CURRENCY ASSETS REACH RECORD HIGH -- MEGAPORTS PROJECT MOVING FORWARD -- CAPITAL INTELLIGENCE RAISES SOVERIGN AND BANK RATINGS -- LEBANON RANKS LOW ON WORLD BANK GOVERNANCE INDICATOR SURVEY OPIC/CITI EXTEND ADDITIONAL LOAN FACILITY TO BYBLOS BANK -------------- ¶1. (SBU) On July 10, Citi Country Officer for Lebanon Walter Siouffi told us that the Overseas Private Investment Corporation (OPIC) and Citi signed a $40 million 15-year term loan facility for Byblos Bank (one of Lebanon's top three commercial banks) this week. This amount will be used for lending to small and medium-sized enterprises (SMEs),for mortgages, and for consumer finance in Lebanon, Armenia and Iraq, where Byblos Bank has a presence, Siouffi said. This is the second time that Byblos has benefited from Citi/OPIC loan facilities as it received $50 million in April 2007. With this new agreement, Citi and OPIC have extended $260 million in term loan facilities (for up to 15 years) to selected commercial banks in Lebanon since January 2007. CENTRAL BANK FOREIGN CURRENCY ASSETS REACH RECORD HIGH -------------- ¶2. (U) The Central Bank of Lebanon's (CBL) foreign currency assets increased by 19% in the first half of 2009 reaching a record high of $23.5 billion. Meanwhile, CBL gold reserves also increased by 7.8% in the same period, due to the rise in international gold prices, reaching $8.66 billion. (Note: Lebanon holds 9.22 million ounces of gold. End note.) MEGAPORTS PROJECT MOVING FORWARD -------------- ¶3. (SBU) A delegation from the U.S. Department of Energy (DOE) visited Beirut July 7-8 to follow-up on the Megaports project at the Port of Beirut. The delegation met with GOL officials from Customs and the Port Authority, as well as the Chairman of the private operator of the container terminal, to discuss next steps in implementation of the project, including an engineering survey scheduled for mid-September. The delegation also met with the PM's advisors and EU officials to discuss training and future cooperation, as the EU is involved with the GOL's land border control project. The Megaports project is expected to become operational in March 2010. CAPITAL INTELLIGENCE RAISES SOVERIGN AND BANK RATINGS -------------- ¶4. (U) Credit rating agency Capital Intelligence (CI) raised Lebanon's long-term foreign and local currency ratings to B from B- and maintained its outlook at stable. The agency attributed the upgrade to a decline in near-term financing risks and a decrease in political risk following the June parliamentary elections. However, it noted that sovereign ratings remained constrained by weak public finances and political risk factors. CI also raised its long-term foreign currency ratings of six major commercial banks in Lebanon. LEBANON RANKS LOW ON WORLD BANK GOVERNANCE INDICATOR SURVEY -------------- ¶5. (U) The World Bank's (WB) annual World Governance Indicators for 2008 ranked Lebanon 146 out of 212 countries worldwide and 13 out of 20 MENA countries, on six governance indicators. Compared to the MENA region, Lebanon's rank remained unchanged on government effectiveness, political stability, voice and accountability, and BEIRUT 00000779 002 OF 002 rule of law, while it regressed by one spot in regulatory quality and control of corruption. Lebanon regressed significantly worldwide on the control of corruption indicator, falling by 17 spots. SISON