REINFORCING CONFIDENCE
TBY talks to Dr. Riad T. Salameh, Governor of Banque du Liban, on the peg to the US dollar, efforts to boost entrepreneurship, and stimulating the real estate sector.

BIOGRAPHY
Dr. Riad T. Salameh has been the Governor of Banque du Liban, Lebanon’s Central Bank, since August 1, 1993. He was reappointed three times for a six-year term of office in 1999, 2005 and 2011. Salameh manages all aspects of the Central Bank and is assisted in his functions by four vice-governors and the Central Council. Salameh attended the Jesuits College of Collège Notre Dame de Jamhour and graduated with a BA in economics from the American University of Beirut.Confidence in the Lebanese economy and pound is relatively resilient despite a challenging external environment. What factors are behind this confidence?
Confidence in the Lebanese economy is threefold. First and foremost, exchange rate stability has been the anchor of financial stability in Lebanon since the late 1990s. This fact has been manifested in the systematic decrease of the dollarization rates of deposits and loans for the past two decades. Trust in the Lebanese pound is thus higher than ever and has in turn reinforced confidence in the economy as a whole. Second, the historical accumulation of a large stock of foreign currency assets has shielded the Lebanese economy against major political, security, and economic shocks. Banque du Liban's foreign assets increased from around USD3 billion in 1993 to around USD37 billion today, and this is not even including gold reserves, which at July 2016 market prices were estimated to be more than USD12 billion. Finally, the large remittances from the Lebanese diaspora have been the backbone of the Lebanese economy for several years. They have helped in adjusting sizable current account deficits and have supported the multiplication of bank deposits to the point where they represent three times the size of the Lebanese economy. According to the World Bank, total remittances were estimated at around USD7.2 billion in 2015, making Lebanon the 16th largest recipient of remittances globally and the second largest among Arab countries.
Banque du Liban has been the main promoter of entrepreneurial activities in the knowledge-based economy. How would you assess the level of response to these initiatives and what are the prospects for this segment to become a flagship economic sector in the near future?
The idea to inject money into this sector came about when we recognized the significance that the knowledge economy had and the potential it could bring to develop the national economy. In order to capitalize the sector, we decided to increase banks' investment possibilities in this sector from 3-4% coming out from their own capital. Three years on from the emission of Circular 331, we have seen tangible results through the growing number of startups attracted by and benefiting from this equity-financing scheme. To date, banks have committed more than USD300 million, with capital value of more than USD700 million. The ecosystem as a whole is systematically growing, increasing its ability to cater to the various types of sectors the knowledge economy is revolutionizing. Human capital has always been, and will remain, the main driver of the Lebanese economy, so our prospects for the future of the ecosystem are rather promising. Lebanon is effectively witnessing its highly qualified youth pushing the limits of innovation and creativity to the next level. The knowledge economy is thus undoubtedly one of the fundamental sources of inclusive growth for Lebanon's medium to long-term outlook, in addition to the financial and the oil and gas sectors.
Banque du Liban recently launched a new circular to stimulate the real estate sector. How will this stimulus contribute to revitalizing the real estate industry?
Until recently, the real estate sector was a rising star in the Lebanese economy with ambitious and extensive projects all across the territory. The economic complexities posed a threat to the industry and the sector lost its impetus, so in June 2016 we decided to issue Circular 427 with the aim of stimulating the real estate sector. This incentive scheme allows Lebanese banks and financial institutions to offer credit facilities of up to 60% to real estate companies, so they can acquire built properties with the purpose of selling them at a later stage, subject to specific conditions. This new scheme will not only benefit real estate developers, but the entire supply chain in this industry. By stimulating the sector we aim to increase our GDP.

TABLE OF CONTENTS
Focus: Lebanese-French Relations
Let’s be Franc
Lebanon shares a close relationship with its former colonizer, both in terms of economic relations and cultural identity among Lebanese. In spite of hardships like the presidential power vacuum and Syrian war next door, the bond is only getting stronger.
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The Tripoli Transformation
The Tripoli Special Economic Zone (TSEZ) is one of most ambitious projects in Lebanon at the moment. With an initial cost of USD27 million, it is meant to provide an alternative to the heavily centralized economic activity in Beirut, a new gateway for investments and trade to settle in northern Lebanon, and will transform the image of a long-neglected region.
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Dr. Freddie Baz, Vice Chairman & Group Strategy Director, Bank Audi
TBY talks to Dr. Freddie Baz, Vice Chairman & Group Strategy Director of Bank Audi, on the bank's increase in profits, dealing with currency devaluation, and working to turn the economy into an export-driven one.
read articleReview: Insurance
Life is a Rollercoaster
Unlike many emerging markets, Lebanon enjoys a relatively high insurance penetration rate and strong life segment, buoyed by compulsory lines and bancassurance. Competition remains fierce, however, and reform aimed at encouraging consolidation looks far off.
read articleInterview
Max R. Zaccar, Chairman of Commercial Insurance & President of the Association, Insurance Companies
TBY talks to Max R. Zaccar, Chairman of Commercial Insurance & President of the Association of Insurance Companies, on the resilience of the sector, increasing the already-high penetration rates in the country, and remaining one of the strongest insurance companies in the region.
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HE Arthur Nazarian, Minister, Energy and Water Resources
TBY talks to HE Arthur Nazarian, Minister of Energy and Water Resources, on the potential offshoots from oil and gas explorations, the country's National Energy Efficiency Action Plan, and attempts to increase renewable energy consumption.
read articleInterview
Wissam Zahabi, Chairman, Board of the Lebanese Petroleum Administration (LPA),
TBY talks to Wissam Zahabi, Chairman of the Board of the Lebanese Petroleum Administration (LPA), on making the investment climate attractive for foreign companies and becoming self-sufficient in energy.
read articleFocus: Sovereign Wealth Funds
Gas Pipe Dreams
Despite excitement over exploration of Lebanon's hydrocarbons, the creation of a sovereign wealth fund, which was included in legislation, has yet to take place. The country faces several obstacles in its path to creating and properly managing a fund.
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Pierre El Khoury, General Director, Lebanese Center for Energy Conservation (LCEC)
TBY talks to Pierre El Khoury, General Director of the Lebanese Center for Energy Conservation (LCEC), on the development of energy efficiency in Lebanon, awareness of energy conservation, and the country's 2020 renewable energy goals.
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Dr. Fady Gemayel, President, Association of Lebanese Industrialists (ALI)
TBY talks to Dr. Fady Gemayel, President of the Association of Lebanese Industrialists (ALI), on the group's work to promote industrialists, new developments in terms of industrial cities, and the future of industry in the country.
read articleFocus: Industrial Cities
Industrial Solution
Domestic and regional events have stifled Lebanon in building a strong national industry to protect and sustain its economy. Four proposed industrial zones throughout the country may provide it with the economic backbone it so desperately needs.
read articleInterview
Marianne Hoayek, Director of the Executive Office, Banque du Liban
TBY talks to Marianne Hoayek, Director of the Executive Office of Banque du Liban, on the roots of the Circular 331 concept, bridging funding gaps throughout the startup lifecycle, and the country's growing knowledge economy.
read articleRoundtable
Thinking It Through
On June 12, TBY and the American-Lebanese Chamber of Commerce (AmCham) organized a roundtable titled “Startup ecosystem sustainability: fostering cooperation to drive entrepreneurship." The participants discussed the impact of Circular 331, an initiative by Bank du Liban, the Lebanese central bank, to inject a potential of USD400 million into the local enterprise market and guarantee 75% of banks' investments in startups and startup support.
read articleFocus: Infrastructure for the startup ecosystem
The New Star
Startups are ubiquitous in Lebanon despite the difficulty of starting a business and the lack of services available to new businesses. However, a number of actors, both public and private, are innovating the environment and allowing startups to fulfill a greater role in the country's economy.
read articleFocus: Maritime Exports Bridge
Bridging The Gap
The conflict in Syria has wrought serious damage on the Lebanese economy, effectively closing off the country's trade routes through Syria. However, a new program geared at balancing the price disparities between land and sea transit is poised to help Lebanese industries.
read articleFocus: Real Estate
A Stimulus For The Rest Of Us
The real estate market in Lebanon is nothing like it used to be. The sector has slowed considerably, and demand has shifted from the traditional center, Beirut. However, stimulus packages from the central bank over the years have proven beneficial for all parties involved.
read articleInterview
Armand Pahrés, President, Lebanese Pharmaceutical Importers Association (LPIA)
TBY talks to Armand Pahrés, President of the Lebanese Pharmaceutical Importers Association (LPIA), on the development of legislation in the sector, boosting further innovation, and opportunities for Lebanon to become more self-sufficient in pharmaceuticals.
read articleFocus: Incentives for pharmaceuticals in Lebanon
Pharma Land
Lebanon has always been the region's leader in all things health related. Its pharmaceutical industry is no exception, and the country's incentives for international pharma companies to operate, manufacture, and distribute in Lebanon are only getting stronger.
read articleInterview
HE Elias Bou Saab, Minister, Education and Higher Education
TBY talks to HE Elias Bou Saab, Minister of Education and Higher Education, on the ministry's initiatives to improve the education system, ensuring access to education for Syrian refugee children, and reversing the brain drain in the country.
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Mohamed Harajli, Provost, American University of Beirut (AUB)
TBY talks to Mohamed Harajli, Provost of the American University of Beirut (AUB), on his upcoming plans for the university, the key role played by the AUB alumni, and fostering an entrepreneurial spirit among students.
read articleFocus: Programs to school Syrian refugee children
High Marks
Proportional to its population, Lebanon has taken in significantly more Syrian refugees than any other country. With the country now facing the problem of placing the tens of thousands of Syrian children in school, international donors and local and foreign organizations are making educational support a priority.
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Joseph G. Jabbra, President, Lebanese American University (LAU)
TBY talks to Joseph G. Jabbra, President of the Lebanese American University (LAU), on embracing technology at the university, the challenges of Lebanon's brain drain, and the importance of having international links with other institutions.
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