Lebanon: increase in financial inflows not enough to cover trade deficit
Financial inflows to Lebanon saw a significant increase over the first four months of 2012. But the growth was still not enough to cover the trade deficit, which rose significantly leaving a net deficit in the balance of payments.
Financial inflows increased by 23.6 percent year-on-year to reach $5.1 billion in the first four months of 2012, compared to an annual decline of 28.5 percent reported in the same period of last year.
Capital flowing into Lebanon can take several forms, ranging from non-resident deposit inflows, to inward remittances, foreign direct investment and cash transfers from tourists.
Non-resident deposits went up by $400 million during the first four months of this year, accounting for a 14 percent rise in total deposits versus 29 percent in 2011.
With regards to remittances, anecdotal evidence from the World Bank suggested that inflows have remained more or less steady. The latest estimates showed that inward money from the Lebanese diaspora remained constant at $7.6 billion in 2011.
In parallel, the balance of payments account recorded a cumulative deficit of precisely $ 916.1 million in the first four months of 2012. That deficit compares to $597.8 million over the corresponding period in the previous year.
The deficit registered in the first four months of 2012 is the result of a decline of $1.828 billion in net foreign assets of Lebanese commercial banks, as well as an increase of $912 million in net foreign assets of the Central Bank of Lebanon.
The deficit of $542.9 million registered in April 2012 is the result of a decline of $1.337 billion in net foreign assets of Lebanese commercial banks.