Debt rescheduling and requests for decreased interest rates have become common practice between traders, industrialists and banks in Lebanon, owing to the ongoing recession in the country. The causes, size and distribution of debt by sector are explored here.

Bank loans

At the end of 2002, bank loans to the private sector reached LL 24,752 billion ($16.4 billion), out of which LL 20,341 billion ($13.5 billion) were loans in foreign currencies, or 82.18% of the total. This high dollarization trend, owing to lower interest on loans in foreign currency, is also evident in deposits, with dollarization of bank deposits reaching 65.6% of total deposits by end 2002.

 

The loans make up 38.5% of deposits, which reached LL 64,274 billion ($42.6 billion) at the end of 2002. Compared to the previous year, loans increased by 1.3%, or LL 332 billion ($220 million), a small percentage that indicates lack of demand on borrowing.

Distribution by sector

The highest percentage of bank loans (45.11%) went to the trade and services sectors, distributed as shown in Table 1 on the following page.

Geographic distribution of loans

The highest percentage of loans was in the Greater Beirut area (81.75%), followed by the mohafazat of Mount Lebanon (8.52%), North Lebanon (3.71%), South Lebanon, Nabatieh (3.09%) and the ... Full Story