How come?  The Economist explains:

The ironic truth is that the country’s double curse, of chaotic internal politics and being located in a nasty neighbourhood, are proving helpful for a change. For one thing, they have made Lebanese bankers unusually wary and resourceful. Four years ago, for instance, the Banque du Liban’s (central bank) stern and far-sighted head, Riad Salameh, banned any dealing in such tricky foreign instruments as mortgage-linked securities. And while banks, property developers and service vendors raked in business as private cash spilled out of the oil-enriched Gulf, competition between influence-seeking powers brought a windfall in aid for reconstruction following the ruinous 2006 war with Israel. Iran alone has injected perhaps $1 billion to rebuild the heavily bomb-damaged parts of Beirut run by its protégé militia, Hizbullah.

Lebanon’s economy gets as much as $6 billion in remittances a year from about 10 million Lebanese living abroad, or roughly 20% of GDP, per a March 24 report by Standard Chartered Bank.  And thus far, fears that the global crisis would force home thousands of expatriates have proved unfounded.  That said, forecasters predict that economic growth will probably slow to 4% this year.  But Lebanese banks may still be a sector to consider, despite a recent warning  by the IMF which warned that as the global financial crisis took its toll on the oil-rich economies of the Persian Gulf, capital inflows to Lebanon could weaken and the growth in commercial bank deposits slow.  Lebanese banks are required to hold a third of their foreign currency deposits in cash and to have a capital adequacy that is more than 11% on average.  Moreover, Lebanon central bank Governor Riad Salameh announced earlier this month a plan to cut the loan reserve requirement for banks to help push down borrowing costs.  The move could push lending rates to about 7.5% from 10%.  Finally, Moody’s upgraded Lebanon’s local and foreign currency government bond ratings from B3 to B2, while the currency ceiling for foreign currency bank deposits was upgraded from B3 to B2 and the country ceiling for foreign currency bonds from B2 to B1.

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