by Tracy F. Saade
The Faculty of Business Administration and Economics (FBAE) at the Notre Dame University (NDU) organized a round table discussion under the title “The Lebanese Financial and Economic Crisis: Challenges and Possible Solutions”. The seminar was held in NDU’s Abou Khater Auditorium in and featured a panel of experts including: Amin Saleh, Director General of the Lebanese Tax Foundation and Former Director of the General Accounting Office Assignment at Ministry of Finance, Dr. Mohamad Hamadeh, Professor of Economics, Faculty of Business Administration and Economics at NDU, Dr. Marwan Barakat, Assistant General Manager, Group Chief Economist and Head of the Economic Research at Bank Audi, Mohamed Chamseddine, Policy Research Specialist at Information International SAL revealed about the dark corridors of corruption and its implications on the Lebanese economy, and Dr. Viviane Naimy, Professor of Finance and Dean in Faculty of Business Administration and Economics at NDU.
The round table started with a welcome speech by Dr. Viviane Naimy. Dr. Naimy shed light on the importance of this gathering and highlighted on the topics that each guest speaker will be talking about.
Dr. Mohamad Hamadeh, talked about the possibility of transitioning from a Rentier Economy to a Productive one. Hamadeh considered that the fiscal and monetary policies that were applied since the 1990s led to the establishment of the Rentier Economy and to the dominance of unproductive sectors. This made Lebanon vulnerable to external and internal shocks. Dr. Hamadeh added. “[We need to] put a plan with the government to define the Lebanese economic identity and role and to set policies in line with the pre-defined identity. This is the only way to build a productive economy for the future.”
Amin Saleh was the second guest speaker. Saleh answered a particularly popular question: Is the government budget a tool for economic growth? Saleh considered that there are three main roles related to the budget: To plan a financial and social policy, to implement programs and to monitor the implementation of those programs. He added that Lebanon has entered the crisis as a result of absence of different policies, absence of a clear vision, and actual monitoring. Saleh proposed the following plan to help solve the economic crisis: “implement an economic, financial and monetary policy for the span of 5 years in order to end this crisis, adopt a quick bailout, not pay the Eurobonds and not submit to the conditions that are set by the International Monetary Fund.”
Following a fruitful discussion about government budget, Dr. Marwan Barakat also addressed an important topic. He suggested possible solutions to exit this economic crisis and talked about Corollary Banking Implication. Dr. Barakat started by shedding light on 5 challenges that Lebanon has to face:
- Improving the external situation, especially after a decrease in the movement of funds.
- Reform the public finance.
- Improve the monetary situation, knowing that we expect a decrease in the reserves of Banque du Liban (BDL).
- Unify banking standards.
- The change from a positive economic growth to a negative economic growth in all sectors in the economic activity.
Dr. Barakat pointed out several solutions by saying: “there must be a law related to capital control, promote domestic production rather than depending on import, improve the electricity which forms one third of the deficit, secure help from the International Monetary Fund or others, and resort to privatization of some companies that can undergo such process.”
Mohamed Chamseddine expanded on the effects of corruption on the Lebanese economy. He referred to several files, which include: the case of the cement companies, the cellphone issue, the case of the Golf Club Association and the maritime public property. He also talked about the sectarianism in Lebanon that protects the corrupted. “The most important solution is to put a new electoral law that produces a new political entity.”
Dr. Viviane Naimy was the last speaker who analyzed the pros and cons of the exchange rate fixity. Dr Naimy showed in numbers, how the Government was spending without any control and how the debt was accumulated and financed by the BDL and commercial banks. She also showed how the BDL did not put any control on the exposure of banks toward the Government, which led to the current crisis. She gave the output of her research on the elasticity of the commercial banks equity versus their exposure to the public debt. She also explained how the fixity of the exchange rate should follow a well-devised and calibrated model that takes into consideration the level of interest rates, the growth rate, the primary deficit to the GDP and the total public debt to the GDP. Unfortunately, the BDL focused on fixing the Lebanese Lira without respecting other financial and monetary constraints.
The discussion was moderated by Dr. Hassan Hamadi, Professor of Finance, Faculty of Business Administration and Economics at NDU. The discussion concluded with an open Q & A between the students and guest speakers.
This event was organized by an ad-hoc committee appointed by Dr. Viviane Naimy and including: Dr. Hassan Hamadi (chair), Dr. Charbel Bassil, Dr. Etienne Gebran Harb, Dr. Lindos Daou, and Dr. Barbara Tannous.