Finance Minister Fouad Siniora declared that the government would extend a 1997 subsidy program in an attempt to reduce interest on commercial loans for projects in the tourism, agriculture, industrial, and information technology sectors.
The finance ministry announced that the new subsidies would be applied to loans taken out after April 1997 and having maturities between 5 and 7 years. The government will increase its interest rate coverage from 5 percent on the LP3 billion ($1.99 million) of the loan amount to 7 percent on LP5 billion ($3.32 million), and 5 percent on the remaining balance up to a ceiling of LP15 billion ($9.95 million) or its equivalent in foreign currency. The average lending rate as of October as reported by the Association of Lebanese Banks was 11.3 percent in dollars and 18.1 percent in Lebanese pounds.
The increased government subsidy will also apply to bank loans partly guaranteed by the state-subsidized guarantee program for small loans, Kafalat. Siniora added that the government plans to increase the maximum amount for 5-year loans under Kafalat from LP100 million ($66,000) to LP300 million ($199,000). ¯ ( Banque du Liban et d'Outre-Mer Sal )
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