Geert Bekaert and Campbell R. Harvey's


Chronology of Economic, Political and Financial Events in Emerging Markets




Major Political and Economic Events


The Investment Development Authority of Lebanon was created to support foreign investors. With very few exceptions, there is no discrimination between national and foreign investments.rr


The introduction of the Insider Trading Laws.a4


ADR effective date. (Company=BANQUE AUDI SAL GDR, Exchange=PORTAL)a11


(Provisions specific to commercial banks and other credit institutions) Banks need the prior approval of the central bank to acquire shares in foreign financial institutions. Net debtor interbank position between a Lebanese bank and its affiliate or sister company abroad should not exceed 25% of core capital.a3(first entry)


(Provisions specific to commercial banks and other credit institutions) Liquid assets in foreign exchange should not be less than 30% of the total clients' deposits, net interbank credit accounts, CDs, bonds, and subordinated loans maturing in less than one year.a3


A stand-alone S&P/IFCG Index for Lebanon was added to S&P's family of frontier market indices with a history calculated back to Dec 31, 1998.


(Provisions specific to commercial banks and other credit institutions) For commercial banks, the volume of debt instruments in foreign currencies should not exceed 4% of total deposits in foreign currencies as of the end of the previous financial year; for investment banks, the limit is 6%.a3


Lebanon carried out positive reforms in the construction sector.


(Controls on derivatives and other instruments) The issuance and trading of derivatives requires prior BL approval. (Provisions specific to commercial banks and other credit institutions) Guarantees issued on derivative transactions should not exceed 7% of the bank's equity.a3


The budget deficit rose to 51.8% and the current account deficit increased to US$60 million. The peace process hit another impasse after a summit between Syrian President Hafez al-Assad and U.S. President Bill Clinton failed to break the deadlock. Lebanon's privatization plan continued to be mired in politics.


The central bank intervened in the currency market.


Israel withdrew its troops and the Jeddah-based Islamic Development Bank announced that it would lend the country US$100 million to help rebuild southern Lebanon.


The increase in the nonperforming loans in the banking sector, partially caused by a real estate crisis loomed large. S&P placed all of Lebanon's ratings on credit watch with negative implications. Mobile phone licenses were sold for US $4 billion.


In the third quarter, Syrian President Hafez alAssad passed away. The government budget deficit jumped to 53.2% of expenditures during the first half of the year, and debt service exceeded revenues. Lebanon also recorded a US$463 million merchandise trade deficit for June.


Lebanon domestic public debt exceeded 140% of GDP.


S&P lowered its long-term foreign currency issuer and senior unsecured debt ratings on Lebanon to 'B+' from 'BB-' and its long-term local currency issuer credit rating from 'BB' to 'BB-'. S&P also lowered the long-term ratings for the three major banks.


The Banque du Liban spent nearly US$170 million to prop up the pound. Majlis al-Nuwab was elected as Lebanon's president.


Nearly 3000 Lebanese students demonstrated against the Syrian troops. Israeli airplanes raided parts of southern Lebanon. Syrian leaders vehemently denounced calls for withdrawal.


The Israeli air strike against a Syrian radar station deep inside Lebanon.


Syria removed its forces from areas in and around Beirut.


The central bank was forced to spend reserved to support the Lebanese pound. The BLOM reached a new 52-week low. S&P downgraded Lebanon's long-term foreign and local currency ratings.


The government decided to postpone the ninth biennial Summit of the Francophone Movement by a year.


Elie Hobeika, a key figure in the massacres of Palestinian refugees in 1982, dies in a blast shortly after disclosing that he held videotapes and documents challenging Israel's account of the massacres.


European Union (EU) Commission President, Romano Prodi, and Lebanese Prime Minister, Raifq Hariri, yesterday initialed Lebanon's Association Agreement with the EU.


VAT is introduced at 10%.


The Finance Ministry announced yesterday that it has sanctioned a US$1bn Eurobond issue.


The Phalange Party has expelled former president Amin Gemayel from its ranks, adding that it intends to take him to court for 'slander, denigration and defamation'.


Row with Israel over Lebanon's plan to divert water from a border river. Israel says it cannot tolerate the diversion of the Wazzani, which provides 10% of its drinking water, and threatens the use of military force.


During a meeting with creditors on, over US$4bn was pledged to the Lebanese sovereign at favourable rates.


An estimated 4,000 Syrian troops are reported to have redeployed from positions in northern Lebanon, in the third such move in less than two years.


The central Banque du Liban announced that it would cut interest rates on Certificates of Deposit (CD) by 0.25% in a bid to place downward pressure on punishingly high market rates.


Prime Minister Rafiq Hariri resigned.


Lebanon's constitutional council called for the interior ministry to withdraw citizenship from tens of thousands of Palestinians and Syrians naturalized in 1994 under an official decree.


Clashes between Yasser Arafat's secular Fatah movement and militant Islamic groups have left eight people dead


The US Consulate reopened on Friday (30 May) after being closed for 19 years in response to bomb attacks on the US Embassy in Beirut during the Lebanese civil war (1975-1990).


The Ministry of Finance is set to introduce a comprehensive income tax system in an effort to substantially increase government revenues by means of more effective collection methods, rather than through an increase in the income tax rate


Car bomb in Beirut kills a member of Lebanon's militant Hezbollah group. Hezbollah and a government minister blame Israel for the blast.


Demonstrations were held in the capital, Beirut, marking the second anniversary of the arrests of anti-Syrian protesters in Lebanon.


Legislation allowing Palestinian property ownership withdrawn from Lebanese parliament.


Lebanon faces largest public sector workers strike for a decade


For the first time in nine months, the government released T-bills into the markets. Two- and three-year bills were issued, with one-year bills scheduled to be released today.


Former Agriculture Minister Ali Abdullah was arrested on charges of embezzlement, wasting public funds and forging official documents


Security forces arrest two men suspected of planning attack on US embassy in Beirut.


Twenty-seven men receive jail sentences over series of attacks on American and British-owned businesses in Lebanon.


Former Agriculture Minister Ali Abdullah was arrested on charges of embezzlement, wasting public funds and forging official documents


Lebanon resumes capital punishment and executes three convicted murderers.


The four-stage voting process for municipal councils, mayors and village headmen began on Sunday (2 May), with polling getting under way first in the Mount Lebanon area.


At least six people died in Lebanon following clashes between demonstrators and the security forces after protestors took to the streets over fuel price hikes.


Regulations on Foreign Investors


Restrictions: No available.

Taxation: 10% income tax.a6


Restrictions: central bank approval is required to purchase treasury securities, money market instruments, and derivatives, and some credit operations are prohibited. There are no restrictions on payments and transfers. b3

Taxation: 15% corporate income tax. 10% capital gain tax. b1


Taxation: VAT is effective at 10% on February 1st. b1