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French Version

Beirut merchants ask banks for special break - retailers say debts are crippling (Daily Star)

‘Customs duties … are a heavy burden on the commercial sector due to high tariffs imposed on imports and commercial exports’

The Beirut Merchants Association urged on Tuesday banks to go easy on merchants saddled with bad debts by lowering lending interest rates and called on the government to lower electricity fees, customs duties and end squandering at the National Social Security Fund.

“We hope that a solution will be found for merchant loans that are causing them financial strain through extending payment time and decreasing interest rates,” said Nadim Assi, head of the association, at a press conference. “Creating a mechanism to pay off merchants’ debt in order to avoid dispute among merchants and banks is the only thing needed,” he said.

Recently the Central Bank issued a memo urging banks to resolve the issue of non-performing loans by giving them greater leeway in foreclosing on real estate owned by merchants to pay off their debts.

Assi said the agreement the Central Bank brokered with banks would allow merchants to reschedule debt payment time from five years to 10. “Each merchant will have to negotiate the rescheduling of debt payments and interest rates with his own bank,” said Assi.

Merchants, suffering from lower profit due to economic stagnation, have accumulated around $3 billion in bad debts that have snowballed over the years due to steep interest rates.

The Association of Lebanese Banks argues that the figure is lower, differentiating between bad loans that lead to bankruptcy and non-performing loans that are collected over an extended period of time.

Prime Minister Rafik Hariri recently called on banks to lower their interest rates on loans, which have remained relatively higher than rates on deposits. The interest rate on deposits dropped after Lebanon secured $4.4 billion in soft loans to reschedule its own public debt.

The loans secured at last year’s “Paris II” conference of donor countries allowed the Central Bank to cut interest rates on Treasury bills, prompting the banks to cut rates on their deposits. Recently, Banque Audi announced cuts in interest rates, a move that was praised by Hariri and members of the private sector.
“Furthermore, banks should clarify their plan for extending new loans to merchants,” said Assi, adding that interest rates on loans should be cut further.

Assi said that the government should also fulfill its promise of lowering electricity costs and customs duties. “The custom duties were and still are a heavy burden on the commercial sector due to high tariffs imposed on imports and commercial exports that weigh down this sector,” Assi said. “It is high time that the merchants’ demands are met by lowering taxes and customs duties. If they are not cut down, the situation would lead to instability in the prices of goods.”

Assi said the government should also pass a 2004 fiscal budget that caters to the citizen’s social, health, educational and development needs while implementing the reform pledges made at Paris II.

Beirut 03-11-2003
Dania Saadi
The Daily Star

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