lebanonnewsnetwork.com

THE IMF RECENTLY PUBLISHED A POLICY PAPER entitled : “Lebanon—Weathering the Perfect Storms” ( written by Axel Schimmelpfennig and Edward H. Gardner) to review Lebanon’s ability to manage financial pressures following severe shocks despite its large public debt overhang and significant external vulnerabilities. (more…)

 By Sana TahaLebanon’s financial markets seem to be overcoming the political and military one long week of turmoil. The Eurobond market absorbed well the May 2, 2008 new issue of $882M at 9% interest maturing 2014, BLOM Invest Bank’s brief stated.  It was swapped with close to 93% of the $250M issue maturing May 2008, close to 60% of the $250M issue maturing June 2008, and 47% of the $750M issue maturing August 2008. Otherwise, demand was stable and prices hardly changed, with the weighted offer yield increasing by 2 bps to 7.87%. As to the average offer spread, it declined by 10bps to 497bps, largely due to the rise in the benchmark yield of the 10-years US treasury to 3.92%. (more…)

Crude oil traded near $126 a barrel in New York after setting records last week as a weaker dollar prompted investors to buy commodities and fighting in Beirut added to concerns that Middle East supplies may be disrupted. (more…)

DIFC, May 09, 2008 — In response to the heightened political tension affecting Lebanon, Moody’s Investors Service today said that Lebanon’s foreign and local currency government bond ratings remain at B3 with a stable outlook.
“B3 is typically the lowest rating possible for governments that are not in default, or at imminent risk of default, and denote very poor creditworthiness and a high probability of repayment difficulties,” explains Tristan Cooper, Vice President - Senior Analyst in Moody’s Sovereign Risk Unit. “Given that the government of Lebanon is not in default, Moody’s believes that the country’s low ratings already encapsulate the risk of severe political turmoil,” says Mr Cooper. (more…)

The General Labor Confederation (GLC) on Monday called a one-day general strike in Lebanon for May 7 because of the government’s refusal to raise the minimum wage from LL300,000 to LL960,000 per month. While an economist labeled the minimum wage “atrocious,” the GLC’s strike call also has political overtones, as GLC chief Ghassan Ghosn organized a series of sparsely attended demonstrations last year in front of various ministries. He has long been a vocal critic of Prime Minister Fouad Siniora’s government, while the minimum wage has sat at LL300,000 for more than a decade.
The Consultation and Research Institute (CRI) estimates that cumulative CPI inflation reached 58% between 1996-07. In the first period covering the years 1997-98, inflation averaged 13% annually because of high reconstruction expenditures. Between 1999-05, however, inflation was very moderate averaging close to 1.6% annually because of monetary stability and post-reconstruction slowdown. Inflation resumed to higher levels afterwards, increasing to 4.5% in 2006 because of the July War, and to about 6% in 2007 due to higher commodity and food prices, in addition to a weaker dollar. CRI has started tracking CPI since 1977, whose components cover 800 goods and services with adjustments to their weights undertaken in 1988 and 2004.
The GLC said it wanted to set a new monthly minimum wage of LL960,000, with an additional 63.3-percent pay raise for workers in the private sector. In a statement, the confederation called on employees from the private and public sectors to participate
Interesting to note that CRI’s cumulative inflation contrasts with the Central Administration of Statistics (CAS) figure which reached 24%, but that is because CAS’s CPI cover the 1998-07 period and uses end-of-year prices instead of average prices.