2016年-世界发展银行全球_Financial_Sector_Assessment___Lebanon_39页_508kb

Summary of the Financial Sector Assessment for Lebanon (December 2016)

Core Content

This report presents the findings of a joint mission by the International Monetary Fund (IMF) and the World Bank (WB) conducted in Lebanon from February to April 2016. The assessment focuses on the financial sector's structure, stability, development, and access to finance, identifying key vulnerabilities and offering policy recommendations to enhance financial resilience and sustainability.

Main Findings and Key Vulnerabilities

1. Financial Stability and Resilience

• Lebanon has maintained financial stability for over 25 years despite repeated political and economic shocks.
• The financial sector, dominated by banks, has grown significantly, with assets close to 4 times GDP.
• The banking system has proven resilient to domestic and regional shocks, remaining profitable and maintaining depositor confidence.
• However, vulnerabilities have accumulated due to high exposure to sovereign, interest rate, and real estate risks.

2. Macroeconomic and Fiscal Challenges

• Public debt is at 140% of GDP, a high level for an emerging market.
• Fiscal and external deficits are large, and the economy has faced a decline in growth due to the Syrian conflict and domestic political impasse.
• The balance of payments was in deficit in 2015 for the first time in over a decade.
• Deposit inflows have slowed, and the financial sector's size makes it challenging to address macroeconomic imbalances without significant reforms.

3. Central Bank Role and Policy Implications

• The Banque du Liban (BdL) plays a critical role in maintaining stability through:
  • Exchange rate peg management.
  • Underwriting government debt.
  • Providing liquidity assistance and economic stimulus.
• These policies have helped maintain low inflation and modest exchange market pressures.
• However, they have also led to the creation of reserve money and increased carry costs, which could become unsustainable without fiscal adjustment.

4. Banking System Structure and Risks

• The banking system is highly concentrated, with 66 banks controlling 97% of financial assets.
• Banks have high exposures to sovereign debt and the BdL, with total sovereign exposure exceeding six times Tier 1 capital.
• Real estate is a major component of bank lending, with housing and construction accounting for 41% of total loans.
• The BdL's policies, such as subsidized mortgage loans and liquidity support, have cushioned the real estate market but also created distortions.

5. Capital Markets and Insurance Sector

• Lebanese capital markets are underdeveloped and contribute little to economic financing.
• A Capital Markets Authority (CMA) has been established, and efforts are underway to foster a new trading platform.
• Regulatory improvements are needed, including the creation of a Sanctioning Committee and Capital Market Tribunal.
• The insurance sector is relatively large but hindered by an inadequate regulatory framework. Industry consolidation and professionalization are required for sustainable growth.

6. Access to Finance and Financial Inclusion

• Lebanon has better access to finance than regional peers but lags behind upper-middle income countries.
• A national financial inclusion strategy is needed to prioritize targets and improve access to financial services.
• SMEs face challenges in accessing finance, despite the BdL's stimulus measures.
• The microfinance industry contributes to financial inclusion but lacks prudential regulation, risking over-indebtedness and cross-borrowing.

Key Policy Recommendations

Banking Sector Supervision

• Review the adequacy of supervisory resources.
• Introduce legal protection for supervisory staff.
• Develop and implement integrated risk profiles for all banks.
• Align capital planning with banks’ risk appetite, corporate governance, and risk management.
• Develop capability for top-down stress tests and require periodic bottom-up multi-factor stress tests.
• Establish supervisory colleges for banks with cross-border operations.
• Strengthen the regulatory regime on real estate exposure, including adjusting LTV ratios and professionalizing appraisers.

Financial Integrity

• Align anti-money laundering (AML) and counter-terrorism financing (CTF) offenses with FATF standards.
• Establish a comprehensive mechanism for implementing UN targeted sanctions.
• Adjust AML/CFT resources to reflect actual ML/TF risks.

Crisis Management and Preparedness

• Formalize internal criteria for access to BdL emergency liquidity assistance.
• Develop and implement recovery plan requirements.
• Prepare plans for the orderly resolution of systemic banks while protecting depositors.
• Discontinue policies supporting mergers between sound banks.

Financial Development and Access to Finance

• Adopt a national Financial Access to Finance Strategy.
• Establish the Sanction Committee and Capital Market Court.
• Finalize and implement capital market regulations.
• The CMA should prepare and adopt a Capital Market Development Plan.
• Modernize insurance law to empower an independent insurance regulator.
• Recalibrate and consider phasing out stimulus packages based on a monitoring and evaluation framework.

Conclusion

The Lebanese financial sector has maintained stability through effective central bank interventions and crisis management, but structural and macroeconomic challenges persist. The high level of public debt, reliance on nonresident deposits, and concentration of the banking sector pose significant risks. To ensure long-term financial stability, the government must pursue fiscal adjustment, reduce reliance on external financing, and strengthen the regulatory and supervisory framework. The BdL should also consider reducing its interventions and exploring more sustainable policy tools. Strengthening capital markets, insurance regulation, and access to finance for SMEs and the broader population are critical for future resilience and development.