VZCZCXRO1263
RR RUEHAG RUEHBC RUEHDE RUEHDF RUEHDH RUEHIK RUEHKUK RUEHLZ RUEHROV
RUEHSL RUEHSR
DE RUEHLB #0813/01 2010645
ZNR UUUUU ZZH
R 200645Z JUL 09
FM AMEMBASSY BEIRUT
TO RUEHC/SECSTATE WASHDC 5351
INFO RUEHEE/ARAB LEAGUE COLLECTIVE
RUCNMEM/EU MEMBER STATES COLLECTIVE
RHEHAAA/NSC WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC

UNCLAS SECTION 01 OF 02 BEIRUT 000813 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR NEA/ELA AND EEB/IFD/ODF 
STATE PASS USTR FRANCESCKI 
STATE PASS USAID LAUDATO/NANDY/SCOTT 
TREASURY FOR PARODI/BLEIWEISS/AHERN 
USDOC FOR 4520/ITA/MAC/ONE 
NSC FOR SHAPIRO/MCDERMOTT 
 
E.O. 12958: N/A 
TAGS: ECON EFIN EIND KFLU PGOV LE
SUBJECT: LEBANON: FINANCIAL SECTOR JOINS TOGETHER TO PROMOTE 
CORPORATE GOVERNANCE (ECONOMIC WEEK IN REVIEW, JULY 13 - 19, 2009) 
 
CONTENTS 
-------- 
 
-- BANKING SECTOR SETS UP COMMITTEE TO PROMOTE CORPORATE GOVERNANCE 
-- GOL AIMS TO LENGTHEN DOMESTIC DEBT MATURITY 
-- TOURISM MINISTRY EXPECTS TWO MILLION VISITORS IN 2009; 
PRIVATE SECTOR SAYS MINISTRY HAS NO STRATEGY 
-- BEIRUT RANKS SIX OUT OF 14 MOST EXPENSIVE MENA CITIES 
-- SWINE FLU CASES REACH 70 
 
BANKING SECTOR SETS UP COMMITTEE 
TO PROMOTE CORPORATE GOVERNANCE 
-------------------- 
 
¶1. (SBU) The Central Bank of Lebanon (CBL) and the Association of 
Banks in Lebanon (ABL) jointly established a new committee to 
enhance corporate governance in the Lebanese banking sector.  Amin 
Awad, a member of the Banking Control Commission (BCC), told us this 
committee was created in response to a CBL Circular on basic 
principles of corporate governance.  The committee will issue 
implementation procedures, as well as a checklist that will help BCC 
examiners determine bank compliance with best practices dealing with 
governance, based on Basel II requirements.  Awad expects the 
committee to start publishing compliance procedures in fall 2009. 
 
GOL AIMS TO LENGTHEN 
DOMESTIC DEBT MATURITY 
-------------------- 
 
¶2. (SBU) In his first meeting with the newly elected board of the 
Association of Banks in Lebanon (ABL) on July 9, Central Bank of 
Lebanon (CBL) Governor Riad Salameh announced that the CBL will stop 
issuing five-year Certificates of Deposit (CDs) in Lebanese Lira 
(LL).  In addition, on July 14, Dr. Youssef el-Khalil, CBL Director 
of Financial Operations, told us the GOL intends to start issuing 
5-year Treasury Bills (TBs) on a bi-monthly basis, since the market 
for Lebanese paper is bullish as yields are decreasing.  These two 
actions will shift the liability for banks' excess LL liquidity from 
the CBL to the Lebanese government, while extending the GOL's public 
debt maturity.  In the past, the GOL had issued 5-year TBs only 
once, in the spring of 2005 after the assassination of Prime 
Minister Rafic Hariri, to maintain currency stability.  Currently, 
the GOL issues TBs of up to three-year maturity on a weekly basis. 
 
TOURISM MINISTRY EXPECTS TWO MILLION VISITORS IN 2009; 
PRIVATE SECTOR SAYS MINISTRY HAS NO STRATEGY 
-------------------- 
 
¶3. (SBU)  On July 14, Director General of the Ministry of Tourism 
(MOT) Nada Sardouk told us that given the large number of visitors 
to Lebanon -- over 760,000 from January to June 2009 -- the MOT 
forecast of two million tourists in 2009 appears realistic.  Sardouk 
said that the current tourism boom began in May 2008 with the Doha 
Conference and flourished due to the political stability and, most 
importantly, security that ensued.  Lebanon's reputation as a 
tourist destination has also been enhanced through invaluable 
coverage in the international press, particularly in Europe and the 
United States.  She highlighted in particular the New York Times' 
ranking of Beirut as its top destination for 2009. 
 
¶4. (SBU) Meanwhile, head of the syndicate of hotel owners, Pierre 
Achkar, and head of the syndicate of restaurant owners, Paul Ariss, 
respectively, told us separately that although the summer season is 
promising, the MOT does not have a vision or strategy for the 
tourism sector in Lebanon.  Achkar assessed that for tourism to 
prosper, security was much more important than political concerns, 
while Ariss said he does not believe Lebanon has the infrastructure 
to accommodate the projeted two million visitors. 
 
BEIRUT RANKS SIX OUT OF 14 MOST 
EXPENSIVE MENA CITIES 
-------------------- 
 
¶5. (U) According to Mercer Human Resource Consulting, Beirut ranked 
41 out of 143 cities worldwide in terms of cost of living in 2009, 
up from 80 in 2008; and six out of 14 MENA cities, unchanged 
compared to 2008.  The survey noted that Beirut's surge in the 
ranking was more a reflection of changes in foreign exchange rates 
and the value of the dollar, rather than a rise in prices.  The 
 
BEIRUT 00000813  002 OF 002 
 
 
study measures the comparative cost of over 200 items, including 
housing, food, clothing and household goods, as well as 
transportation and entertainment. 
 
SWINE FLU CASES 
REACH 70 
-------------- 
 
¶6. (U) According to the Ministry of Public Health (MOPH), the number 
of swine flu cases reached 70, up from 47 during the first week of 
July.  No deaths have been attributed to the flu in Lebanon.  The 
MOPH said it will begin issuing weekly bulletins to keep the public 
updated on the virus's spread.  It noted that it expects the number 
of swine flu cases to rise as more tourists and expatriates enter 
the country for the summer holidays.  Meanwhile, Minister of Public 
Health Khalifeh announced that he will be attending the Arab Health 
Ministers' emergency conference in Cairo July 22 to discuss 
contingency plans ahead of the Muslim pilgrimage season. 
 
SISON