FINANCIAL SECTOR ASSESSMENT
LEBANON
OCTOBER 2013
FINANCIAL AND PRIVATE SECTOR DEVELOPMENT VICE PRESIDENCY
MIDDLE EAST & NORTH AFRICA REGIONAL VICE PRESIDENCY
THE WORLD BANK
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CONTENTS
Glossary ..................................................................................................................................... i
Executive Summary .................................................................................................................. ii
I. Macro-financial Setting ..........................................................................................................1 A. Macroeconomic Environment and Prospects ............................................................1 B. Lebanon’s Financial System .....................................................................................2
II. Strategy for Capital Market Development ............................................................................4
III. IOSCO Assessment of selected principles ...........................................................................5
IV. Roadmap for Capital Market Authority ...............................................................................6
V. Development of Local Capital Markets ................................................................................9
VI. Insurance Sector Assessment .............................................................................................12
i
GLOSSARY
BDL Banque du Liban
BCC Banking Control Commission
BSE Beirut Stock Exchange
CD Certificate of Deposit
CMA Capital Market Authority
FSA Financial Sector Assessment
FSAP Financial Sector Assessment Program
GDP Gross Domestic Product
ICC Insurance Control Commission
IOSCO International Organization for Securities Commissions
LACPA Lebanese Association of Certified Public Accountants
LBP Lebanese Pound
MENA Middle East and North Africa
MOU Memorandum of Understanding
NSSF National Social Security Fund
OTC Over the Counter
PAYG Pay-As-You-Go
PPP Public-Private Partnership
SIC Special Investigation Commission
SME Small and Medium Enterprises
TN Technical Note
ULP Unit-Linked Product
WBG World Bank Group
ii
EXECUTIVE SUMMARY
Lebanon’s very large banking system has inhibited the emergence of capital markets.
The country’s licensing regime grants banks ipso facto authorization to engage in the full
range of capital market activities.1 The authorities have embarked on developing new capital
market channels for intermediating saving and investment to complement and compete with
banking. The aim is to enrich financing choices, particularly long-term risk capital, to support
private sector initiative and jobs that come with sustainably higher growth. The ultimate
outcome will be better allocation and monitoring of capital. An element of this strategy is to
establish a credible regulator of such financial intermediation. Law 161, enacted in 2011,
created the Capital Markets Authority (CMA) which is soon to launch operations.
The FSAP team conducted a targeted assessment of a selection of IOSCO Principles
that are most relevant at this early stage of regulatory evolution. Law 161 provides the
CMA with broad authority and a sound foundation on which to build an effective regulator.
However, the CMA must quickly decide on a number of items that will anchor credibility:
recurrent stable funding, recruitment and training, procedures and policies, immunity,
investigative and enforcement capabilities. The CMA still needs to identify a stable and
sufficient source of funding for its operations. It must also expeditiously hire and train a
workforce that is adequate in both size and skills to enable the CMA to perform its regulatory
duties. Size and skills have obvious implications for its budget. The CMA must quickly
develop sound and comprehensive internal operating policies and procedures to achieve an
appropriate level of governance, coordination with other regulatory bodies both domestically
and internationally, internal controls, and appropriate accountability to a higher state
authority. Law 161 needs to be amended to ensure that CMA Board members and employees
have protection from personal liability in the performance of official duties. Finally, the
CMA must be granted authority under the Bank Secrecy Act to obtain financial records to
investigate suspected violations especially where timely regulatory intervention is crucial,
including market manipulation, insider dealing and other serious types of misconduct.
The CMA needs a well-sequenced roadmap of tasks as it gears up for the launch of full
scale operations and beyond, toward the attainment of functionalities observant of
IOSCO Principles. The CMA will take over the regulatory and supervisory functions of the
capital markets from BDL/BCC. Several activities must proceed in parallel to meet
milestones that are prioritized as a function of CMA obligations under Law 161 and
reflecting limited initial resources. Despite a comprehensive law and the experience from
BDL/BCC as the previous regulator, the CMA will be embarking on developing its own
regulatory identity based on internationally recognized best practices.
A respected regulator is only one element of a master plan to nurture capital market
functionalities that meet the needs of private companies and the country’s
infrastructure program. The master plan should include coordinated efforts to increase
both supply of and demand for capital market products, strengthen supervision and
1 According to the Code of Money and Credit.
iii
enforcement, and attract both domestic and international investors through an outreach
campaign. On the demand side, creating a steady flow of investments into securities with
long-term horizons, primarily by the pension and insurance sectors, will help the market
grow; thus the CMA should develop capabilities to convince decision-makers in these areas,
particularly the much-needed insurance and pension laws. In addition, the master plan should
find ways to bolster the appeal of collective investment schemes with a view to mobilizing
long-term individual savings. At the same time, the authorities should strive to increase the
supply of flagship securities, through inter alia public offering and/or bond issuances by
state-controlled enterprises. If managed properly, these issuances will help re-kindle interest
in the Lebanese market as well as encourage private companies to raise funds from the
market instead of banks. Finally, progress will hinge on the confidence that investors and
issuers gain in the effectiveness of the CMA, including in its oversight of exchanges.
Market development will be a long-range balancing act between financial innovation
and prudent oversight in the peculiar context of Lebanon. Initial conditions appear to
constitute as many obstacles: high dollarization; central bank activism to ensure a stable
exchange rate; high government indebtedness; political economy and security constraints;
overbearing banking system; closely held family businesses. An effective CMA is only a
necessary condition along the developmental path that Lebanon will trace for itself, with
many stakeholders in both the public and private sectors having to play their role as issuers,
investors, intermediaries, and enablers. The CMA will over time play a lead role in line with
its mandate for market development.
A new insurance law would be important capital market development. The insurance
sector is material compared to other markets in the region but small by international
standards. Insurers generally have sufficient expertise to operate current business models but
weaknesses should be addressed in risk identification and management. Despite severe legal
limitations, the Insurance Control Commission (ICC) has grown in stature and respect, and
has taken full advantage of areas where improvements can be made through regulation. The
sector’s further development hinges on passing the new draft law pending in Parliament.
iv
Modular FSAP - Main Recommendations2
Recommendations Priority
(H/M)
IOSCO targeted assessment
Sign memoranda of understanding with the BCC, ICC, BDL, and SIC. H
Develop a contingency plan for obtaining necessary funding if the fees collected are insufficient. H
Develop comprehensive internal operating procedures and draft employee manuals H
IOSCO membership and assisted self-assessment H
Roadmap for roll-out of new capital market authority
Prompt recruitment and training of a sufficient number of qualified staff H
Review existing regulations for deficiencies and address them in a prioritized manner H
Develop licensing, inspection and product approval plans H
Develop enforcement capability H
Capital market development
Establish a capital market development Master Plan that evolves from consultations with other
stakeholders , i.e. other Government agencies and the private sector M
Review of impediments to the use of the capital markets as a funding and investment vehicle,
including review of the tax structure, barriers to entry, un-level playing field, etc. M
Support efforts to establish a new pension law (pension reform), insurance law and PPP law H
Execute programs to increase demand and supply of securities: promote domestic funds; listing
and debt issuances by state-owned enterprises M
Legal framework for insurance
Further develop risk management and assessment capacity in both the industry and the ICC M
Modernize the outdated insurance law M
Prepare and ongoing sector development strategy M
2 H/M: High or medium priority level.
1
I. MACRO-FINANCIAL SETTING
A. Macroeconomic Environment and Prospects
1. The escalating Syrian conflict is increasingly affecting Lebanon on the security
and political fronts. Spillovers from the Syrian conflict have complicated an intricate
political balance and exacerbated an already tense and volatile security environment.
Security incidents, such as kidnappings, bombings and armed conflicts have become
increasingly more frequent. A large influx of Syrian refugees, estimated by the UNHCR at
over 700,000 in August 2013, has contributed to straining the government’s thin resources.
2. The Syrian conflict and precarious security environment have taken a toll on
economic activity since July 2012. After robust growth performance from 2007 to 2010,
growth is estimated to have decreased significantly to 1.4 percent in 2012 and to continue to
expand at a subdued pace in 2013 (1.5 percent). From the demand side, private consumption
and investment remain soft as consumer and investor confidence have been particularly
affected by the volatile security environment. From the supply side, tourism, a central source
of employment and growth for the Lebanese economy, was negatively affected. As a result,
tourist arrivals slumped 17 percent in 2012 and continued to contract, by 13.9 (yoy) percent,
in the first four months of 2013.
3. The effects of the major fiscal expansion that started in 2012 continue to
reverberate in 2013. The overall budget deficit increased to 8.7 percent of GDP in 2012 as a
result of a surge in expenditures stemming from the cost of living adjustment that was
approved in early 2012. Domestic revenues are expected to decrease from 22.3 to 21.7
percent of GDP in 2012 and 2013, respectively, owing to the deceleration in economic
activity. On the other hand, total expenditures are expected to increase from 31.1 to 31.6
percent of GDP in 2012 and 2013, respectively, partly as a result of an increase in demand
for public services by Syrian refugees. The rising fiscal deficit combined with low growth
will lead to a reversion in the downward trend in the debt-to-GDP ratio which is expected to
increase from 134.4 percent of GDP in 2012 to 137.1 percent of GDP in 2013.
4. Due to the narrowing of the trade-in-goods deficit and the continuous increase in
capital inflows, the balance of payments strengthened during the first seven months of
2013. The improving trade-in-goods balance reflects a decrease in imports due to (i)
weakening economic activity and the softening local demand and (ii) large and lumpy oil
imports for the national electricity company (EdL) in February 2012 that have not yet
materialized in 2013. Exports also surged, from a low base, in the first seven months of 2013
reflecting increased food demand from Syria. Meanwhile, the elevated spread between
domestic and international interest rates continues to attract capital inflows which contribute
to narrowing the balance of payments deficit.
5. The Lebanese banking sector, one of Lebanon’s main services sectors, has
traditionally enjoyed high liquidity and a large asset base. The sector has shown
resilience to external shocks. The sector benefited from (i) prudent management and (ii)
2
conservative regulation and oversight by the BDL and the Banking Control Commission
(BCC). With relatively under-developed financial markets, the banking sector has been at the
center of financial intermediation in the country. After steadily increasing over the 2009-
2012 period, assets of commercial banks continued growing by 8.5 percent (yoy) in the first
seven months of 2013.
6. Liquidity in the banking sector has been cushioned by non-resident deposits that
are attracted by the spread over international interest rates.3 Non-resident private sector
deposits grew by 23.4 percent (yoy) in the first seven months of 2013. The banks remain
exposed to sovereign risk as large investors in government debt. 4 In a bid to diversify, banks
expanded regionally, including in Syria. Excluding unrealized foreign exchange gains,
Lebanese banks operating in Syria are estimated to have lost USD205 million; these have
been provisioned. The worsening security environment and the heightened uncertainty have
also led to a deceleration in the growth rate of lending to the private sector from 17.3 percent
(yoy) in July 2011 to 10.3 and 9.9 percent (yoy) in July 2012 and 2013, respectively.
Medium- to long-term prospects remain positive when the Syria conflict is resolved.
7. Money supply increased in the first half of 2013 partly reflecting the central
bank’s attempts to stimulate the economy. M3 increased by 3.2 percent between year-end
2012 and June 2013. The increase in the money supply is expected to have a limited
multiplier impact due to weak consumer sentiment and a deceleration in the growth of
lending to the private sector. The dollarization rate of deposits inched slightly up to 65.8
percent in 2013 increasing by 1 percentage point from end-2012 likely reflecting a worsening
in Lebanon’s outlook, as captured, for example, by Moody’s outlook downgrade from stable
to negative in May 2013.
B. Lebanon’s Financial System
8. Banks dominates financial intermediation in Lebanon. Total assets of the banking
sector are equivalent to approximately 350% of GDP. Wealth is heavily invested in bank
deposits which historically were used by banks to finance government borrowing. Lebanon
has a highly dollarized banking sector (64% dollarization rate); savings are not mobilized
into private investments due to the high return offered by banks (particularly in dollar terms).
The predominant banking sector model involves relationship banking and collateralized
credit, which impedes the growth of SMEs and new business ventures. Approximately only
one-sixth of bank credits are channeled to small and medium-size enterprises.5 In addition,
long-term projects do not have viable funding alternatives given the short-term bank funding
and limited institutional saving. Life insurance products are mainly invested in FC-
denominated government securities, while the assets of the pay-as-you-go (PAYG) “pension
3 IMF (2012) estimate that 40 percent of total bank deposits belong to nonresidents.
4 Banks still held 50.2 percent of outstanding government debt in July 2013 despite a trend down over the past
few years. Banks also hold deposits with BDL amounting to 35 percent of their assets.
5 Countries in MENA with higher share of SME lending include Morocco (24%) and Yemen (20%).
3
fund” are by law invested in LBP government securities. The PAYG fund pools salary-based
premia into an end-of-worklife indemnity.
9. The development of capital markets has been inhibited by the dominance of
banking, despite a rich history of commerce and a vibrant stock exchange in earlier
times. These problems are common, but the situation in Lebanon is quite interesting because
historically it had a relatively vibrant capital market before the civil war (beginning in the
mid-1970s) when the stock exchange was closed for twenty years. Since its reopening in
1996, the stock market has been shrinking. Today, the market consists of only 11 listed
entities, and only a few of them are traded – these are the largest banks and a large real estate
developer. Stock market capitalization to GDP is approximately 24%, with a stock market
turnover of 4% which is consistent with the low trading activity. The Lebanese capital
market also includes a variety of equity/debt hybrids, a small number of large unlisted
companies that trade in an opaque OTC market, and a variety of private placement issues
with non-standard terms.
Box 1. Lebanon: Structure and salient characteristics of the financial system
The banking sector retains very large exposure to Government (even excl. substantial claims on the central
bank), although direct exposure has declined since 2006, as banks diversified into private sector credit.
The large bank assets are funded by deposits of around 300% of GDP, mostly by residents and mostly foreign
currency. Large and growing central bank reserves support confidence in the banks and their ability to
remunerate deposits with attractive rates under a tightly managed exchange rate regime.
-10
10
30
50
70
90
110
130
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Lebanon
LMC
HIC OECD
Credit to Government (% GDP )
0
20
40
60
80
100
120
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Credit to Private Sector (% GDP)
LebanonLMCHIC
0
2
4
6
8
10
12
14
16
18
2005 2006 2007 2008 2009 2010 2011
LebanonLMCHI OECD
Total Reserves (in months of imports)
4
Banks’ dominance and high deposit rates have stunted the mutual funds industry. Potential mutual fund
business has also been diverted to life insurance products.
Local equities are not yet a meaningful alternative to long-term savings, given low market capitalization,
collapsed turnover, and limited choice of tradable stocks.
II. STRATEGY FOR CAPITAL MARKET DEVELOPMENT
10. The absence of an independent regulator has hampered market development. The absence of a regulator has depressed confidence, undermined investor protection, and
deprived the market of both a vision and an advocate. Currently, the BDL has responsibility
for capital market regulatory policy, with supervisory duties performed by the BCC. The
Beirut Stock Exchange (“BSE”) is a self-regulatory organization with some oversight by the
Finance Ministry. BCC activities are built around prudential regulation. Enforcement actions
have been few and far between.
11. The strategy to develop the market has two pillars: a respected regulator on the
model of BDL/BCC in banking; the design of a master plan jointly by the regulator, the
industry and other relevant stakeholders. Law 161/2011 created the CMA as an independent
entity with very broad powers for regulation, investor protection and market development.
Pursuant to Law 161/2011, the Board was appointed in November 2012, comprised of two
government representatives (Director General, Ministry of Economy, and Ministry of
Finance), the President of the Banking Control Commission, three full-time independent
members, and chaired by the Governor of BDL. Due to limited staff and tools, the CMA has
however not yet started meaningful operations.
0
5
10
15
20
25
30
35
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Mutual Fund Assets (% GDP)
Lebanon
LMC
HIC
0
10
20
30
40
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Insurance Industry Assets (% GDP)
Lebanon
LMC
HIC OECD
0
10
20
30
40
50
60
70
80
90
100
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Stock Market Capitalization (% GDP)
Lebanon
LMC
HIC
0
20
40
60
80
100
120
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Market Turnover Ratio (%)
LebanonLMCHIC
5
12. The strategy envisages the design of a capital market master plan, led by the
CMA. Market development will include efforts to increase supply of securities (e.g.
promoting more issuances), development of institutional demand base (e.g. reforms in the
pension and insurance investments), and removing other obstacles (e.g. institutional
framework, taxation). Examples of these reforms may include privatization and public-
private partnership programs, introduction of new products/instruments, improvements in
market infrastructure (exchange, clearing/settlement, depository/custodian).
13. To pump-prime the market, CMA is also potentially considering a mixture of
incentives and regulatory initiatives. On the demand side:
BDL/BCC as regulator of investment banks could incentivize them to invest up to
half of their resources in BSE-listed securities;
the privatization of BSE could attract the trading of securities that currently trade
OTC, as investors prefer the anonymity of these markets, even though protection is
weak;
Regulations on admissibility of bank capital could give favorable treatment to BSE-
listed securities.
On the supply side:
BDL/BCC could prod banks to raise capital through BSE listing;
BDL/BCC could lower risk weights for claims on listed entities, or give such claims
preferential status among eligible collateral for BDL liquidity;
BDL as owner of prominent commercial/industrial companies, could float some of
these shares;
CMA could incentivize the listing of funds specializing in start-up businesses.
III. IOSCO ASSESSMENT OF SELECTED PRINCIPLES
14. The FSAP conducted a streamlined IOSCO Assessment of selected principles of
securities regulator. Given the relatively new capital market law (Law 161) and new Capital
Markets Authority, the FSAP conducted assessment of only five IOSCO principles relating
to the Regulator, specifically on its (i) scope of responsibility, (ii) independence and
accountability, (iii) adequacy of powers, resources, and capacity to perform and exercise its
powers, (iv) regulatory processes, and (v) professional standards.
15. Law 161 enacted in 2011 created the CMA and provided it with broad legal
authority that provides a sound foundation on which to build an effective market
regulator. As of the date of this assessment the CMA has yet to begin operations. An
amendment to Law 161 is needed to provide CMA Board members and employees with legal
protection from liability for the bona fide performance of official duties. The application of
Lebanon’s Bank Secrecy Act may hamper effective enforcement of portions of Law 161,
such as market manipulation and other types of misconduct that requires swift intervention.
16. Creation of an effective regulator will require providing the CMA with a stable
and continuous source of funding. While law 161 provides authority for funding from fees
6
imposed on the capital market, as is common in many countries, Lebanon’s capital market is
too small to generate sufficient fees to meet the CMA’s budgetary needs. It may be necessary
to identify other sources of funding until such time as Lebanon’s capital market has grown
measurably. Law 161 empowers the CMA to use penalties and fines that it imposes as a
source of funds. This approach may create controversy and undermine public perception of
the CMA if the public believes that funds are imposed primarily to meet the authority’s
financial needs. Funds obtained from penalties and fines could be used to establish a fund for
the compensation of defrauded investors, establish investor education programs, or used to
support other capital market development initiatives.
17. The CMA must negotiate memoranda of understanding with key regulatory
authorities in Lebanon, including the BDL, BCC, ICC, SIC, BSE, Midclear and
LACPA. It should also begin communications with regulatory authorities in other regional
and GCC countries, as well as regulators in the E.U. countries, the U.S. and Canada; as a
significant number of Lebanese citizens actively invest in these markets. The CMA should
also apply for membership in IOSCO as soon as possible.
18. Creation of an effective regulatory authority requires the development of
internal operating policies and procedures. Policy standards and written manuals
containing these policies and guidance on compliance should be prepared to ensure
regulatory transparency; and to develop a system of internal controls to achieve an
appropriate level of accountability. These internal procedures should include the following:
procedures to insure public opportunities for comment on proposed regulations, public access
and notice of CMA licensing and enforcement actions, adoption of an employee code of
conduct with appropriate standards for recusal, procedures to provide entities and individuals
with an opportunity to respond to charges of misconduct and to participate in CMA actions
that directly affect regulated entities and individuals, and a process by which complaints of
employee misconduct are reviewed to determine if remedial actions are needed. An investor
education and financial literacy program should also be developed.
19. Developing a regulatory authority that fully implements all 38 IOSCO Principles
will require substantial efforts in the short to medium term. A sound law and an adequate
budget are essential prerequisites for an effective regulator. However, they do not guarantee
success. The CMA must hire the proper staff, develop sound procedures to perform its
functions, adopt or amend regulatory standards and demonstrate to the public that it is an
effective regulator.
IV. ROADMAP FOR CAPITAL MARKET AUTHORITY
20. Prior to the passage of Law 161, regulatory oversight of the capital markets had
been performed by BDL and BCC. Now that the CMA Board has been convened and the
process of recruiting suitable staff has commenced, the process of transferring regulatory
responsibility to CMA is underway. Given that Lebanon’s capital markets have been in
operation for many years, one critical consideration in this transition of regulatory oversight
responsibility is the need to ensure that this process occurs in such a way so as to ensure
minimal disruption. Although the manner in which the CMA as an independent capital
market regulator will perform its functions will differ both in approach and scope from those
7
of the previous regime, much of the work already accomplished by BDL and BCC will form
a solid foundation as Lebanon’s capital markets continue to move forward. See Table 1 for
CMA’s regulatory and supervisory scope.
21. In order to ensure that the transition of regulatory oversight progresses as
smoothly as possible, a roadmap for the CMA has been prepared jointly by both the
CMA and the World Bank Group. Although the successful attainment of the milestones
contained in this roadmap will depend on a variety of factors, one critical threshold issue
involves the sufficiency of CMA resources including the timely recruitment of suitable staff.
In addition to the emphasis placed on staffing and having in place other necessary resources,
the roadmap takes into account a multitude of factors that will help to successfully manage
the transition. The timing involved in addressing these factors has been determined based on
priorities and includes: examining existing regulations, identifying possible deficiencies and
prioritizing an action plan to address them; reviewing the financial positions and activities
conducted by regulated financial market participants and designing a licensing regime best
suited to these activities; and preparing plans for the on-site and off-site inspection of
financial firms, financial product approvals, market supervisions and the regulation of both
BSE and Midclear and the process of attending to investor complaints .
22. The CMA will also need to develop proficiency in international accounting and
auditing practices. The CMA will be called to verify the accuracy of financial statements of
public interest companies, ensure that material facts are identified and properly disclosed,
regulate financial rating agencies (Article 11/III of Law 161), and generally rely on quality
audits to discharge its responsibilities under the Law. In this regard, a training program for
CMA staff in IFRS and IFA standards should be set up. CMA will also need to coordinate
with LACPA, the industry organization mandated by the Ministry of Finance to ensure that
local accounting and auditing firms meet standards of quality assurance.
23. The roadmap envisages a three- to five-year timeframe to achieve substantial
compliance with the IOSCO Principles. As mentioned in the previous section, given that
the CMA will soon seek to become a member of IOSCO, in certain respects the CMA is
fortunate in that it can use the IOSCO Principles as an important guide in moving toward full
regulatory operations. It must however be kept in mind that the IOSCO Principles focus on
implementation and thus the roadmap has in part endeavored to enable the CMA to
accomplish implementation in certain areas as soon as practicable.
8
Table 1. CMA’s Regulatory and Supervisory Scope, Current Data (2012)
# % of
GDP
#
Operating Entities Issuances (in 2012)
Non-Bank Financial Institutions 53 Number of Issuances
Financial Intermediaries (Brokerage) 12 Listed Equities* 3
Investment Banks 16 Listed Funds 0
Exchanges 1 Bonds
Clearing, Settlement, Depository 1 Rep. of Lebanon – LBP den. 128
Rep. of Lebanon – Eurobonds 8
Securities and Funds Corporate Bonds 20
Listed Entities (excl. Government) Mutual Funds 18
Companies 10 24.2
Funds 1 0.1
Listed Securities (incl. Government) Others
Equities 25
Funds 1 Number of companies with OTC-
traded securities
N/A
Govt. Eurobonds 25
Mutual Funds
Foreign Funds 604 1.7
Domestic Funds 24 1.0
Number of Bonds Outstanding
Rep. of Lebanon – LBP denominated 271 76.3
Rep. of Lebanon – Eurobonds 40 50.2
Corporate Bonds 36 2.2
*Only preferred shares and GDRs listed/issued in recent years.
24. The roadmap comprises six work-streams, with milestones designed to allow for
an early start of the most critical operations and a roll-out of further initiatives thereafter:
Licensing of institutions and registered representatives dealing in financial
instruments;
Prudential framework;
Corporate governance of issuers, disclosures, public offerings, mergers and
acquisitions;
Regulation and supervision of investment funds;
Design of master-plan for capital market development
Training of registered representatives and website.
25. An important step in the roadmap concerns the licensing regime. The practice in
Lebanon has been to authorize capital market activities under the generic licenses issued by
BDL. Going forward, all licensed institutions will have to lodge their capital market
businesses in separate subsidiaries. For insurance companies operating under ICC license, the
9
regulation and supervision of their investment-like products will be subject to an MOU
between CMA and ICC.
26. A comprehensive analysis of anticipated expenditures and potential sources of
revenue to fund CMA operations will be critical. Given that regulator independence from
external influence is an important aspect of effective regulation, establishing a sound
financial plan will greatly contribute to enabling the CMA to effectively carry out its
regulatory functions. Given the current low level of capital market activity in Lebanon,
market-based revenue generation by the CMA will, for the foreseeable future, be somewhat
limited. Although most regulators secure their funding from market-based activities, one
must ensure that the burden placed on the market does not result in the activity migrating
elsewhere (which as we know in this global and technologically advanced world can happen
in an instant). Striking the appropriate balance is essential. However, relatively thin and
underdeveloped markets such as those in Lebanon, present particular challenges for
regulators in securing sufficient market-based funding.
27. A practice of consultation with the industry will be critical in establishing the
credibility of CMA; in this regard, CMA stands to learn from the long-standing
experience of ICC. ICC has developed over the past decade an effective process of
consultation with the entities it regulates. Consultations are both informal and formal. When
ICC intends to develop a major piece to regulation, it will call informal roundtables with
selected players in the industry. Industry views are used to inform the drafting of regulations,
which are then submitted for formal comments. These consultations are supplemented by
continuous interactions at various levels of the agency, especially operational levels. Indeed,
the process has been essential in keeping regulatory staff abreast of business practices on the
ground, new products and their adaptation to the local marketplace. This process has over the
years built the credibility of the agency, not only as a regulator but also as a partner in
developing the industry. Accordingly, ICC has been able to identify areas where
advancements beneficial to the long-term development of the industry can be made despite
limitations in the legal framework. It is suggested that CMA board members should take the
early lead in reaching out to the industry and canvassing expectations.
V. DEVELOPMENT OF LOCAL CAPITAL MARKETS
28. The high dollar interest rates paid on bank deposits has inhibited the
development of the local capital markets. Wealth is accumulated in the form of bank
deposits, holdings of Lebanon Eurobonds, and foreign equity. The large bank deposits are
mainly invested into government securities, either Eurobonds or LBP bonds. Credit to the
private sector has grown recently; however, reliance on relationship banking and heavy
collateralization of bank credit impede the growth of small industries and startup business
ventures. Approximately one-sixth of bank credits are channeled to small and medium-size
enterprises.
29. There is an absence of institutional investors that would expand investor base to
include investments seeking long term exposure. The pension industry is very small; the
NSSF, the only meaningful pension fund invests in Government securities and bank deposits
exclusively. Insurance companies are growing, but remain relatively small and have
10
restrictions that limit investing in the capital markets. Investment funds have contributed
minimally to mobilizing individual savings into the local capital markets and to date, have
served mostly the banking sector. Equity exposure takes the form of foreign equity funds.
30. Government sees the need to develop capital markets to help finance corporate
growth and infrastructure development. In the infrastructure sector, private participation
in financing is desperately needed. Government spending on infrastructure could only get to
2-3% of GDP; while ideally a total of 6-7% of GDP is needed to support the economic
growth and maintain the quality of infrastructure and services, not to mention redevelopment
of infrastructure destroyed during recent conflicts. Growth in the technology and
telecommunication sector, among others, also needs financing. The government
acknowledges Lebanese competitive advantage in creative and service industries, backed by
a large pool of talents and high-quality education.
31. There exist potential demand and supply of securities that, if harnessed well,
could reactivate the domestic capital market. There is a pool of firms whose listing could
immediately reactivate the stock market. These include state-owned enterprises and around
15 to 20 private companies of good size, some of the latter are already considering offering
shares to the public. Further, there are some large companies whose shares are traded over-
the-counter, which could go to the listed market immediately. On the demand side, as of end
2012, around 634 funds were registered in Lebanon with a total amount of assets under
management of approximately US$1.12 billion, about 3 percent of GDP(Table 1). The large
number of funds marketed domestically suggests a large potential demand.
32. It is incumbent on the Government to establish a comprehensive capital market
development program, which includes efforts to increase supply and demand,
strengthen supervision and enforcement, and must be accompanied by an effective
outreach campaign. Initially, it will be important for the Government to develop a formal
approach to both short- medium- and long- term strategies, supported by a Master Plan that
serves as a reference point and provides both consistency and continuity in relation to
reforms. Numerous countries have used this approach to build consensus regarding the
agenda and priorities among stakeholders, within the Government, and among the public and
the private sectors, and to guide the authorities in implementing the agenda. Efforts to
increase both the supply and demand of securities should be conducted in a coherent and
timely manner.
33. The Government should drive efforts to steadily increase the supply of
investable instruments. In many markets, privatization through the offering of state-owned
enterprises can have a beneficial catalytic effect on capital market development as they tend
to be large (with sufficient float this can greatly assist secondary market liquidity) and well
recognized (likely to be attractive). The Government may want to start with entities that are
less contentious, such as those companies partially owned by BDL directly or indirectly,6
6 E.g., Casino du Liban and Middle East Airlines.
11
while continuing to explore other possible candidates, including in the telecommunications
sector. Privatization could address governance issues associated with BDL holding shares in
SOEs. The Government may also persuade large regulated entities, such as insurance
companies and banks that are not already listed, to raise funds through IPOs. The authorities
should also pursue the new law on public-private partnership (PPP) – which among other
things will launch new private sector entities operating in the infrastructure sector which
could well use the capital markets as the primary source of financing.
34. Programs to prepare companies, which will later be eligible for listing/public
offering, should be promoted through various interventions. Typically investments in
medium-sized companies are conducted privately, but the authorities may promote Private
Equity and Venture Capital investment. While funds of this nature exist,7 the challenge is
how to mainstream them for broader investor participation. The Government may consider
lodging Government-sponsored funds under Kafalat or the government investment company
Intra, or providing incentive schemes to investors.8 The funds or investees may be listed later.
35. On the demand side, creating a steady flow of investment into investment
instruments with a long-term horizon, primarily from the pension and insurance
sectors, will help grow the markets. Most important among several efforts would be
pension reform, aiming primarily at improving post-retirement income and reducing old-age
poverty, but which in practice would accumulate funds that will be invested in long-term
productive investments. Currently, a proposed law on private pensions is being discussed by
the authorities; the CMA should have a strong interest in pushing this agenda forward. The
law should set broad criteria for investments and allow specific investment directives to be
defined by implementing regulations,9 which can be adapted over time depending on the
level of market development. Similarly, the CMA should support reforms in the insurance
sector, particularly relating to measures of broadening the scope of permissible investments.
36. Within its direct control, the CMA should look for ways to boost the growth of
collective investment schemes. Currently, funds are predominantly (and almost
exclusively) issued and managed by banks Experience in other markets suggests that funds
actually provide healthy competition to banks, and therefore growth driven by non-bank
financial institutions (including independent fund managers) should be promoted. The
authorities may consider providing incentives for investment funds domiciled in Lebanon
and/or invested in Lebanese securities. Tax neutrality should be sought to ensure
competitiveness vis-à-vis other jurisdictions given Lebanon’s open capital account.
7 Organized as funds either in Lebanon (e.g. Berytech) or abroad (e.g. MENA funds) but investing in Lebanon.
8 Schemes that would achieve an appropriate balance between costs and benefits in light of Lebanon’s macro-
fiscal challenges will be taken up in designing the capital market master plan.
9 One of the features of the proposed pension reform is a minimum income replacement rate or minimum return
of the contribution. In this case, the pension funds should be given more latitude to manage the investment risks
in order to achieve such target.
12
37. Increased demand from institutional investors and issuance by large companies
will attract more companies to the markets. As liquidity and valuations increases, more
companies will see the merits of raising funds through the domestic markets. Privately-held
companies will seize these opportunities, probably large companies initially, then followed
by second-tier (medium sized) companies. An indirect consequence of this course of events
is that banks can no longer rely on businesses from larger companies and will begin to
refocus their energies on lending to small and medium sized enterprises.
38. All these efforts need to be complemented by the issuance of effective
regulations, and proper supervision and enforcement. One of the first priorities of the
CMA is to establish strong compliance, supervision and enforcement capabilities. Instilling
market confidence will take time and careful actions. Investors seem to eschew the listed
equity market due to a widespread perception that it is tightly controlled by a few players.
These issues exist not only in the listed market (e.g. extreme volatility of Solidere shares) but
also in the hybrid markets (e.g. banks’ preferred shares) and over the counter. It will be up to
the CMA to ensure market integrity, market governance, and fit and proper professionals to
restore investor confidence. This is a long-term task and requires significant capacity
building. The CMA needs to leverage on existing capacities and work together, through
MOUs with the BDL, BCC, SIC, ICC, BSE, and LACPA.
VI. INSURANCE SECTOR ASSESSMENT
39. The size of the insurance sector suggests an important role for the development
of capital markets. With assets just under 10 percent of GDP, the sector is material
compared to other markets in the region but small by international standards. Growth has
come from motor and medical, while life has been supported by the development of a
bancassurance model, including the introduction of single premium credit life products. In
these unit linked products (ULP), part of the premium is utilized to provide insurance to the
policy holder while the remaining portion is invested in various equity and debt instruments
as directed by the policy holder. In Lebanon, this investment activity is regulated and
supervised by the Insurance Control Commission (ICC).
40. Against this background, the insurance sector assessment reviewed: (i) the
potential exposure of the sector to vulnerabilities, either generated from the sector or in
response to circumstances outside the sector that could be magnified by practices in the
0
0.5
1
1.5
2
2.5
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Insurance Premiums (Non-Life) - GDP (%)
LebanonLMCHIC
0
0.5
1
1.5
2
2.5
3
3.5
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Insurance Premiums (Life) - (% GDP)
Lebanon
LMC
HIC
13
sector; (ii) the potential for the sector to develop, thereby contributing to the overall
development of financial intermediation outside banking; (iii) oversight arrangements for the
sector against international norms and best practices.
41. The sector has largely developed sui generis, rather than through significant
innovation. Insurers tend to have business models that are focused on organic growth of
successful operations and approaches. In more limited cases, innovations have been
experimental, tactical, and not always successful. Future development will, in the absence of
external initiatives, tend to be focused on continuing to refine and grow current practices
organically. This suggests that the sector is better placed to react to change than to initiate it,
and looks to external initiatives for change to a greater extent. Being cautious about change,
and conservative in experimenting, has the advantage of minimizing the risk of loss through
unsuccessful initiatives. However, reacting to rather than anticipating adverse developments
can and has meant that foreseeable losses could have been reduced.
42. The structure of the industry is a constraint on development but solutions
require a modernized insurance law. Industry participants consider that the number of
insurers constrains the sector. However, the response to competition and efficiency settings
should have more nuance than merely encouraging merger and acquisition, especially as
increased access to insurance would expand the market. By taking a positive view of industry
development, a more effective path to sustainability for all players is recommended, but
requires legislative and political support for a proportionate approach to regulation and
supervision in line with international good practices.10
43. Insurers, generally, have sufficient expertise to operate current business
models but some weaknesses should be addressed. Understanding prudent provisioning
has improved but challenges remain. The auditing profession is capable but small insurers
have difficulty justifying services beyond minimum levels. Actuarial capacity in Lebanon is
limited in supply but is available and capable. Weaknesses include concerns about
underpriced products and inadequate pricing capacity, insufficient understanding of
catastrophic exposures, and underdeveloped organization wide approaches to risk
management, including integrated capital, asset, liability and operational risk management.
44. Solvency margin requirements are out of date and low by international
standards. Local and foreign insurers and reinsurers (if any) are subject to the same
minimum capital requirements. At LBP 2.25 billion (USD 1.5 million), the absolute
minimum is not out of line with international norms or a barrier to entry. The required
solvency margin of 10 percent of premium is out-of-date. A more risk based regime should
be explored. Initially, this could be developed as a risk assessment tool for the sector and the
ICC, before it is implemented as a solvency regime under a revised insurance law with
appropriate transitional arrangements, including proportionality.
10
Proportionate approach means that the oversight stance toward a particular insurer is proportional to its
riskiness, as a function of the nature, size and complexity of its portfolio.
14
45. Initiatives directed at improvement should be integrated with supervisory
functions. Supervisory initiatives that start with assessment and dissemination of current
good practices should give stakeholders the opportunity to discuss and develop their own
technical capacity. Priorities would include those directed at a better understanding of risk
exposure and management, economic capital, and risk management. Priority should be given
to assessing risk parameters that would support further refinement of the internal risk rating
systems at the ICC as well as inform insurer management. These would include approaches
to asset risks as well as technical risks in priority business lines, natural catastrophic
exposures, and reinsurance management.
46. The insurance law is very outdated. A new draft has been ready for a while; its
adoption is critical for the sound development of the sector. There is no solid basis for
proportionate approaches in many areas of regulation, solvency and capital regulation is
antiquated, and intervention powers are insufficient to allow a more graduated approach.
Opportunities to develop supervisory cooperation in the region are not sufficiently supported
by legal powers. Corporate governance, internal control and risk management considerations
do not reflect modern thinking.
47. Despite the limitations in the law, the Insurance Control Commission (ICC)
has grown in stature and respect, supervisory practices have been developed, and
improvements instituted as the ICC has taken advantage of areas where improvements can be
advanced. The ICC has shown a robust capacity to develop approaches for review and
analysis, follow-up, market conduct, intermediary registration, and fraud investigation.
48. Consumer protection initiatives have helped to enhance the sector standing
and can be leveraged further. The ICC has initiated a welcome market conduct effort
including a consumer complaint handling service and a reconstituted distribution licensing
system. In the absence of insurance law reform, distribution requirements could be refined
progressively to ensure consumer protection services are maintained, in particular, to
facilitate the range of products and distribution channels in use.
49. Supervisory capacity should continue to develop. Both the analytical efforts and
the supervisory initiatives could be further developed with increased resources and technical
support. As noted, enhancing the risk rating system, including continuing refinement of risk
sensitive financial capacity, and adding additional risk features to more fully reflect the range
of sources of risk in insurance operations would be useful.
15
Table 2. Lebanon: Selected Economic Indicators, 2010-2015
2010 2011 2012 2013 2014 2015
Act. Prel. Est. Proj.
Real sector (annual percentage change, unless otherwise specified)
Real GDP 7.0 3.0 1.4 1.5 1.5 4.0
Real GDP per Capita 6.2 2.3 0.7 0.8 0.7 3.2
Agriculture (share of GDP) 4.5 4.5 4.5 4.5 4.5 4.5
Industry (share of GDP) 20.1 20.1 20.1 20.1 20.1 20.1
Services (share of GDP) 75.4 75.4 75.4 75.4 75.4 75.4
Money and prices
CPI Inflation (p.a) 4.9 5.7 5.7 3.8 3.2 2.9
Money (M3, including non-resident deposits) 12.1 7.1 8.1 8.0 8.0 10.0
Investment & saving (percent of GDP, unless otherwise specified)
Gross Capital Formation 33.9 29.8 29.4 28.5 27.9 30.0
o/w private 32.1 28.0 27.8 26.7 25.9 27.0
Gross National Savings 11.5 17.7 15.0 13.3 12.2 13.3
o/w private 16.8 22.3 21.4 21.0 20.1 19.9
Central Government Finance
Revenue (including grants) 22.7 22.8 22.3 21.8 22.3 23.0
o/w. tax revenues 17.8 16.4 15.7 15.6 16.0 16.5
Total expenditure and net lending 30.4 29.2 31.1 31.6 32.2 32.6
Current 28.6 27.4 29.4 29.8 30.2 29.5
o/w Interest Payment 10.5 9.4 8.4 8.4 8.5 8.6
Capital & Net Lending (excluding foreign financed) 1.8 1.8 1.6 1.8 2.0 3.0
Overall balance (deficit (-)) -7.7 -6.4 -8.7 -9.8 -9.9 -9.6
Primary Balance (deficit (-)) 2.8 2.9 -0.3 -1.4 -1.5 -0.9
External sector
Current Account Balance -20.4 -12.1 -14.4 -15.2 -15.3 -16.7
o/w Export (GNFS) 24.1 32.2 28.7 28.4 28.4 29.4
o/w Import (GNFS) 50.2 50.0 49.2 48.3 48.4 50.3
o/w Remittances 7.2 6.4 6.7 6.7 6.7 7.2
Trade Balance (GNFS) -26.1 -17.7 -20.6 -19.9 -20.0 -20.9
Trade of Goods Balance -31.5 -30.7 -30.1 -28.8 -29.1 -30.5
Gross Reserves (months of imports GNFS) /1 /2 11.5 12.1 11.3 11.3 11.5 10.5
Total Public Debt
Total Debt Stock (in million US$) 52,602 53,656 57,700 61,993 66,677 71,501
Debt-to-GDP ratio (percent) 141.7 133.8 134.4 137.1 141.2 141.6
Memorandum Items:
Nominal GDP (in billion LBP) 55,965 60,442 64,740 68,143 71,199 76,097
GDP (in million US$) 37,124 40,094 42,945 45,203 47,230 50,479
Source: Government data, and World Bank staff estimates and projections.
/1Gross Reserves (months of imports GNFS) = (Imports of Goods & Services / Gross Res. excl. Gold)*12
/2 Total Imports using the BOP data from the Quarterly Bulletin of BDL
16
Table 3. Lebanon at a Glance
Lebanon at a glance 3/20/13
M . East Upper
Key D evelo pment Indicato rs & North middle
Lebanon Africa income
(2011)
Population, mid-year (millions) 4.3 331 2,452
Surface area (thousand sq. km) 10 8,775 59,328
Population growth (%) 0.7 1.7 0.7
Urban population (% of to tal population) 89 58 57
GNI (Atlas method, US$ billions) 39.2 1,283 14,429
GNI per capita (Atlas method, US$) 9,200 3,874 5,884
GNI per capita (PPP, international $) 14,090 8,068 9,970
GDP growth (%) 3.0 4.3 7.8
GDP per capita growth (%) 2.3 2.5 7.1
(mo st recent est imate, 2005–2011)
Poverty headcount ratio at $1.25 a day (PPP, %) .. 3 ..
Poverty headcount ratio at $2.00 a day (PPP, %) .. 14 ..
Life expectancy at birth (years) .. 72 73
Infant mortality (per 1,000 live births) .. 27 17
Child malnutrition (% of children under 5) .. 8 3
Adult literacy, male (% of ages 15 and o lder) 93 82 96
Adult literacy, female (% of ages 15 and o lder) 86 66 91
Gross primary enro llment, male (% of age group) 105 106 111
Gross primary enro llment, female (% of age group) 99 98 111
Access to an improved water source (% of population) .. 89 93
Access to improved sanitation facilities (% of population) .. 88 73
N et A id F lo ws 1980 1990 2000 2011 a
(US$ millions)
Net ODA and official aid 298 286 200 449
Top 3 donors (in 2010):
United States 3 12 32 84
France 16 26 31 60
European Union Institutions 5 29 36 53
Aid (% of GNI) .. 2.6 1.1 1.2
Aid per capita (US$) 114 90 53 106
Lo ng-T erm Eco no mic T rends
Consumer prices (annual % change) .. -99.7 -0.8 5.7
GDP implicit deflator (annual % change) .. 97.4 -2.1 4.9
Exchange rate (annual average, local per US$) .. 695.1 1,507.5 1,507.5
Terms of trade index (2000 = 100) .. 91 100 79
1980–90 1990–2000 2000–11
Population, mid-year (millions) 2.6 3.2 3.8 4.3 1.9 1.7 1.1
GDP (US$ millions) .. 4,690 17,260 40,094 .. 8.8 5.0
Agriculture .. 7.3 7.1 5.9 .. 7.0 0.9
Industry .. 25.5 22.8 20.6 .. 5.2 5.1
M anufacturing .. 14.4 13.0 8.2 .. 6.4 1.2
Services .. 67.2 70.1 73.5 .. 6.4 5.0
Household final consumption expenditure .. 124.5 84.1 74.1 .. 8.0 3.8
General gov't final consumption expenditure .. 14.0 17.3 13.8 .. 14.7 3.3
Gross capital formation .. 29.3 20.4 29.8 .. 9.9 10.4
Exports o f goods and services .. 12.5 14.2 32.2 .. 24.1 9.6
Imports of goods and services .. 79.9 35.9 50.0 .. 11.8 7.2
Gross savings .. -10.5 -1.2 17.7
Note: Figures in italics are for years other than those specified. 2011 data are preliminary. .. indicates data are not available.
a. A id data are for 2010.
Development Economics, Development Data Group (DECDG).
(average annual growth %)
(% of GDP)
10 5 0 5 10
0-4
15-19
30-34
45-49
60-64
75-79
percent of total population
Age distribution, 2010
Male Female
0
10
20
30
40
50
60
70
80
1990 1995 2000 2010
Lebanon Middle East & North Af rica
Under-5 mortality rate (per 1,000)
-10
0
10
20
30
40
50
95 05
GDP GDP per capita
Growth of GDP and GDP per capita (%)
17
Lebanon
B alance o f P ayments and T rade 2000 2011
(US$ millions)
Total merchandise exports (fob) 1,050 5,318
Total merchandise imports (cif) 5,988 20,158
Net trade in goods and services -3,774 -7,116
Current account balance -3,754 -4,866
as a % of GDP -21.7 -12.1
Workers' remittances and
compensation of employees (receipts) 2,544 7,558
Reserves, including gold 8,273 45,216
C entral Go vernment F inance
(% of GDP)
Current revenue (including grants) 18.6 23.5
Tax revenue 14.6 18.5
Current expenditure 38.9 28.0
T echno lo gy and Infrastructure 2000 2010
Overall surplus/deficit -23.4 -6.4
Paved roads (% of to tal) 84.9 ..
Highest marginal tax rate (%) Fixed line and mobile phone
Individual .. .. subscribers (per 100 people) 35 89
Corporate .. .. High technology exports
(% of manufactured exports) 2.3 12.8
External D ebt and R eso urce F lo ws
Enviro nment
(US$ millions)
Total debt outstanding and disbursed 29,137 87,493 Agricultural land (% of land area) 58 67
Total debt service 812 1,084 Forest area (% of land area) .. ..
Debt relief (HIPC, M DRI) – – Terrestrial protected areas (% of land area) 0.5 0.5
Total debt (% of GDP) 168.8 218.2 Freshwater resources per capita (cu. meters) 1,241 1,144
Total debt service (% of exports) 29.4 6.3 Freshwater withdrawal (billion cubic meters) .. ..
Foreign direct investment (net inflows) .. .. CO2 emissions per capita (mt) 4.1 4.1
Portfo lio equity (net inflows) .. ..
GDP per unit o f energy use
(2005 PPP $ per kg of o il equivalent) 6.6 7.5
Energy use per capita (kg of o il equivalent) 1,311 1,580
Wo rld B ank Gro up po rtfo lio 2000 2010
(US$ millions)
IBRD
Total debt outstanding and disbursed 311 411
Disbursements 42 24
Principal repayments 17 20
Interest payments 14 4
IDA
Total debt outstanding and disbursed – 0
Disbursements 0 0
P rivate Secto r D evelo pment 2000 2011 Total debt service – 0
Time required to start a business (days) – 9 IFC (fiscal year)
Cost to start a business (% of GNI per capita) – 75.0 Total disbursed and outstanding portfo lio 218 194
Time required to register property (days) – 25 o f which IFC own account 127 194
Disbursements for IFC own account 20 100
Ranked as a major constraint to business 2000 2010 Portfo lio sales, prepayments and
(% of managers surveyed who agreed) repayments for IFC own account 25 10
Access to /cost o f financing .. 16.5
Electricity .. 12.5 M IGA
Gross exposure – –
Stock market capitalization (% of GDP) 9.2 33.9 New guarantees – –
Bank capital to asset ratio (%) 6.4 7.3
Note: Figures in italics are for years other than those specified. 2011 data are preliminary. 3/20/13
.. indicates data are not available. – indicates observation is not applicable.
Development Economics, Development Data Group (DECDG).
0 25 50 75 100
Control of corruption
Rule of law
Regulatory quality
Polit ical stability andabsence of violence
Voice and accountability
Country's percentile rank (0-100)higher values imply better ratings
2010 2000
Governance indicators, 2000 and 2010
Source: Worldw ide Governance Indicators (www.govindicators.org)
IBRD, 521IDA, 0IMF, 59
Other multi-lateral, 1,227
Bilateral, 2,695Private, 6,710
Short-term, 76,281
Composition of total external debt, 2011
US$ millions
