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Old February 1st, 2012, 06:35 PM   #941
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Lebanon needs a public debt strategy February 01, 2012 02:51 AM (Last updated: February 01, 2012 02:54 PM) By Ibrahim Saif The Daily Star

The Lebanese government has a problem of enormous public debt and, unfortunately, no clear plan for getting out of its current economic situation. But time is of the essence as uncertainty widens on the Syrian front and other regional developments threaten to negatively affect the Lebanese economy and its sovereign debt rating.

In an attempt to avoid complications that might arise from these situations, the government announced that its annual swapping and rescheduling of debts would take place at the end of November, earlier this year than usual. The announcement was accompanied by the issuance of a new batch of eurobonds to secure the liquidity the government needs to conduct its business. This is a familiar process that is repeated each year at different times in an attempt to adjust the large public debt.

The debt swap and the issuance of eurobonds were considered successes, especially given the current circumstances. Bankers could not hide their surprise at the demand and the interest rates offered, considering regional and international markets are experiencing a downgrade in the credit ranking of many governments, thereby raising interest rates on sovereign debt.

A number of facts about the Lebanese economy will have repercussions for a range of sectors. First of all, growth this year is expected to rise just 1.5 percent, a rate well below that of the past two years. The rosiest possible scenario would be a growth rate of no more than 2.5 percent in 2012, but no one wants to count on this number in light of the numerous local and regional changes that could deflate expectations.

Second, it is obvious that the Syrian political crisis profoundly influences commercial relations between the two countries. Most of Lebanon’s land trade passes through Syria, and Lebanese banks, which do a lot of business in Syria, have seen their fortunes decline, despite the likelihood of achieving modest profits as a result of their operations in 2011. It should be noted, however, that Lebanese banks operating in Syria secure private capital for their foreign branches, and so are not expected to reflect negatively on or damage trust in other Lebanese banks. What’s more, the challenges created by the sanctions imposed on Syria have been circumvented due to the responsible reaction of the Lebanese Central Bank in addition to the private banking sector. Riad Salameh, governor of the BDL, Lebanon’s central bank, has made it clear that the Lebanese banking system is clean of any Syrian public funds and thus is not endangered by any restrictions imposed on them.

Third, the Lebanese Canadian Bank crisis and the consequences that resulted from it have undoubtedly made Lebanese banks more stringent in terms of credit facilities. Earlier this year, the Treasury Department sanctioned the bank for laundering money for Hezbollah. And according to a senior banker in Lebanon, Lebanese banks have exaggerated their reactions to this turn of events. They have become “unnecessarily” strict when it comes to granting of such facilities, especially to individuals.

All of this shows that despite the many sticks thrown in the wheel of the Lebanese economy, the outcome has been generally better than expected. The early debt-swap deal at favorable rates, the limited effect of the sanctions on Lebanese banks, and the adamant cooperation of Lebanese authorities in the Lebanese-Canadian Bank crisis are all signs that the system is surviving. However, in addition to the many economic problems in the country, the limited growth prospects this year clearly indicate that something needs to be done.

According to data from the Ministry of Finance, the value of Lebanon’s public debt rose to about LL80.496 trillion ($53.7 billion) by the end of August, an increase of LL1.198 trillion from what it was during the same period last year. It should also be noted that the decline in domestic debt in the portfolio of commercial banks has coincided with a rise in domestic debt in local currency in the Central Bank’s portfolio. The Ministry of Finance issued $1.2 billion in eurobonds on Aug. 2 in the two groups: the first $500 million due in November 2016 at an interest rate of 4.75 percent, the lowest interest rate achieved by Lebanon on the issuance of foreign currency since 1994; and the second, $700 million with an interest rate of 6.2 percent, through the reopening of a eurobond due in October 2022 at an interest rate of 6.1 percent. Demand for bonds was four times the value of bonds on offer, with foreign investors obtaining 21 percent of all bonds issued.

Lebanon’s debt will remain high by all standards, but the problem is not related to interest rates currently paid on bonds and loans; rather, it has to do with the enormity of the steadily growing public debt and the lack of a clear strategy to deal with it. Current expenses such as public wages and social security, which make up the largest portion of overall spending, are left unchanged. Even taking into consideration predictions of moderate growth either this year or next, domestic revenue is not expected to grow enough to lead to a surplus in the budget that might be put toward reducing the ratio of debt to gross domestic product, or at least stop the debt from creeping any higher.

This reality indicates that the indebtedness of Lebanon will remain a thorny issue that will result in future challenges for the country. If the regional situation was to worsen and the margin of risk widen, Lebanon would have to consider alternatives to ensure the availability of liquidity and monetary stability as it suffers from the expected rise in interest rates.

These changes and facts indicate that now is best time for Lebanon to address its public debt and renegotiate some loans while thinking about new methods it can use to raise funds to restructure its debt. Due to the ambiguity of this period, it is considered more favorable to act now. The near future will be fraught with many dangers, while the debt, consuming so much foreign currency revenue, continues to drag down the economy.

Ibrahim Saif is a senior associate at the Carnegie Middle East Center in Beirut.
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Old February 1st, 2012, 06:41 PM   #942
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Lebanese middle class diminishing in size
February 01, 2012 02:51 AM (Last updated: February 01, 2012 01:38 PM) By Paula Jahn The Daily Star

Leaving Lebanon: Many middle class families prefer to live abroad to maintain a good standard of living.


BEIRUT: Lebanon’s once-thriving middle class is now shrinking in number as high inflation, relatively low wages and a lack of major investments in productive sectors take their toll on the population.Lebanon’s recovery from its 1975-90 Civil War has been less than complete, leaving a democratic society with virtually no middle class – normally the group that democratic nations depend on to prosper.

That war “basically wiped out anything that’s called a middle class in favor of a small minority ... about 15 percent of the population, which became very rich,” says economist Simon Neaime.

Neaime, a professor of economics at the American University of Beirut, says that most of the educated class, which used to form the backbone of the Lebanese economy before the Civil War, was forced to seek better jobs abroad to maintain the lifestyle which they enjoyed prior to the conflict.

As of 2011, the World Bank classified the middle class in Lebanon as those people who earn between $15,000 and $27,000 annually.

But the World Bank statistics tell Lebanon’s actual story. Citing its (World Bank) numbers, Neaime estimates that only 5-10 percent fit this category. Seventy percent of the population generates an annual income of less than $10,000 annually while 15 percent live in abject poverty.

Before Lebanon’s Civil War, says Neaime, Lebanon’s middle class made up 50-60 percent of the population, “and then another 20 percent [were] on the two tails, a normal distribution.” That middle class was a vibrant mix of store-owners, small businessmen whose taxes were the backbone of a healthy economy.

Before the war, Beirut was proudly referred to as the Paris of the Middle East, while Lebanon was touted for its leaders as the regional model of tolerance and prosperity – attributes unthinkable without a functioning middle class.

But few things have been the same since the conflict. Western Europe’s middle class rose quickly from the rubble of World War II, helped by massive U.S. aid and support from local governments racing to re-establish healthy capitalism as a bulwark against the Soviet bloc.

Domestic economic rehabilitation programs, such as Solidere – the Lebanese economy reconstruction program – have undoubtedly made a difference in boosting Lebanon’s economy, but at the cost of forsaking the middle and lower class while pampering the upper classes.

Meanwhile, small wage increases imposed in Lebanon by the government as a means of silencing the threat of upcoming strikes are often offset by constantly increasing prices of commodities. “The increase [in wages] will [erode] before it gets in our hands due to rising prices across the board,” photographer Mahmoud al-Tawil recently told the web magazine Al-Shorfa.com, in comments reflecting widely held sentiments.

Alongside rising commodity prices, the would-be middle class is being squeezed by real estate prices that are at an all-time high. Ironically this trend has been fueled by Lebanese who have gone abroad for work due to the lack of good job prospects at home – most companies in Lebanon offer relatively low wages to engineers, architects, MBA graduates and lawyers.

A 2008 Center for Global Development study shows that on average, a Lebanese working abroad earns 31.6 percent more than he would at home. When he does return, he is relatively flush with cash – and his purchasing power on the real-estate market drives prices upward, pushing properties out of reach for those who stayed in Lebanon.

Traditionally, low interest rates expand the real-estate bubble, with investors rushing in and hoping to resell at a higher price within a few years. This speculative market also pushes up prices – a three-bedroom apartment in Beirut that cost $300,000 10 years ago now can fetch a price of more $700,000 or more, depending on the location and condition of the building.

Rents in the capital and the northern Metn have also skyrocketed, prompting newly married couples with university degrees to seek homes outside Beirut.

Inflation further compounds hardships, with an estimated annual inflation rate of 6 percent in 2011, though many economists maintain that the real figure is in fact far higher, due to rising prices across the board.

Neaime says that while the problem is global, “the increase in food prices, the increase in oil and gas prices ... is affecting goods and services locally.”

Lebanese expatriates, especially those who are based in the oil-rich Arab Gulf states, inject an average of $8 billion into Lebanon’s economy and this massive cash flow has helped the balance of payments.

As for restructuring the Lebanese economy, the process included a strong focus on the country’s banking and tourism sectors, a good short-run boost in the Lebanese economy.

As economist Markus Marktanner, previously a professor at AUB, notes, “these are not favorable industries to create a middle class. Both industries have very weak impacts on the labor market.” Tourism can be detrimental to a less than stable economy, Marktanner adds, as it “mostly demands seasonal and unskilled workers.”

“During the Civil War, Lebanon’s economic base as a safe haven eroded and the Gulf emerged as the new hot spot,” explains Marktanner. “The Gulf then also attracted many Lebanese and what could be a middle class in Lebanon became an expatriate middle class of Lebanese outside the country.”

As more and more Lebanese left the country in search of better opportunities, the local economy found less need to cater to the middle class.

Today, Marktanner says, Lebanon is left with no meaningful economic base, as it offers little stability. Those who have the chance to migrate are doing so, particularly college graduates, and perpetuating the cycle by draining the country of a future middle class.

Neaime sees some trend reversal, with salaries for professionals slowly creeping upward at a rate that beats inflation. But some of the revival might be temporary, with those choosing to stay often doing so because the global economic crisis has closed doors of opportunity that were open just a few years ago.

“It’s a combination of an exodus back to Lebanon accompanied by some improvement in the local salary scale,” he says.

Sari Hanafi, professor of sociology at AUB, speaks of a “migration culture” in Lebanon. Lebanese have more opportunity than their neighbors to attain a decent level of higher education, giving them greater mobility than their neighbors to go where the jobs are – including abroad. In Lebanon, Hanafi says, getting a good job is less a matter of skills or education and “more about the connections.”

The country’s open society also means that a young Lebanese college graduate’s goals are defined by Western-inspired consumerist goals unreachable at home.

Hanafi says that a Lebanese male of 25 considers owning a Mercedes and a nice apartment as minimum components of a nice life. Consequently, he will go abroad to support his definition of an “adequate” lifestyle.

In their own words, students at AUB echo Hanafi’s views, with economics student Afif al-Charif summing it up succinctly.

“Of course I plan on leaving Lebanon. Why would I stay?” he said. “Lebanon is not a stable country, everything seems unstable ... I could make three times more money if I worked abroad.”
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Old February 3rd, 2012, 12:01 PM   #943
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Francois Bassil: Lebanon may suffer Greece’s fate February 03, 2012 02:11 AM By Osama Habib The Daily Star


BEIRUT: A leading Lebanese banker fears a Greek economic scenario in Lebanon this year if the government fails to take immediate action to reduce the budget deficit, cut waste and implement broad reforms.

“If the debt continues to rise in the same high tempo then I won’t be surprised if Lebanon experiences the same scenario in Greece, whose economy is in total shambles,” Francois Bassil, Chairman of Byblos Bank, one the three largest banks in the country, told The Daily Star in an exclusive interview Thursday.

Bassil reiterated that Lebanese banks are not willing to lend the government more money if Prime Minister Najib Mikati and his ministers fail to adopt crucial measures to cut the size of the public debt, which has reached alarming levels.

Lebanese banks have been financing most of the public debt since late former Prime Minister Rafik Hariri embarked on a bold drive to rebuild the country.

The Central Bank of Lebanon and local banks hold most of the debt, which is expected to reach $60 billion at the end of 2012 through subscriptions to treasury bills and sovereign eurobonds.

Bassil made it clear that Lebanese banks will roll over the outstanding debts each year, but have no intention or desire to increase their exposure to this debt.

Mikati has so far been unable to implement a number of the reforms that he promised because of sharp political divisions between ministers.

Finance Minister Mohammad Safadi presented the 2012 draft budget to the Cabinet for approval last month, but several ministers, mainly from the Change and Reform bloc, knocked the bill down the moment it became public.

Safadi had proposed raising the Value Added Tax to 12 percent from 10 percent, and raising the tax on interest rates on customer deposits to 7 percent from the current 5 percent.

The finance minister insists that a hike in taxes is unavoidable if the government wants to allocate greater funds for electricity, water and infrastructure projects.

According to data from the Finance Ministry, the value of Lebanon’s public debt rose to about LL80.496 trillion ($53.7 billion) by the end of August, an increase of LL1.198 trillion from what it was during the same period last year.

Meanwhile, as domestic debt has declined in the portfolio of commercial banks, the Central Bank has simultaneously assumed a greater share of sovereign bonds.

The Finance Ministry issued $1.2 billion in eurobonds on Aug. 2, 2011, to be released in two stages: the first $500 million in November 2016, at an interest rate of 4.75 percent, the lowest interest rate achieved by Lebanon on the issuance of foreign currency since 1994; and the second, $700 million in October 2022, at an interest rate of 6.2 percent.

“We will swap the outstanding bonds with other bonds at the current market rates. Interest rates are relatively low now, but they may rise again if no solution for the public debt is found,” Bassil said.

He emphasized that banks are ready to help the government if the latter showed willingness to reduce the size of the public debt, cut waste in all government departments and allow the private sector to take part in essential projects in the future.

“We had the Paris I, II and III donor conferences over the past years, but we have not seen any reform being implemented” the banker said.

Bassil questioned why the government does not seek the help of banks and the private sector to find a solution to the chronic electricity crisis.

“I don’t believe we will have proper electricity round the clock if the concerned ministers reject the assistance of the private sector,” he said.

Energy and Water Minister Gibran Bassil wants the government to secure $1.2 billion in loans to boost electricity supply by 700 megawatts.

But Mikati and Safadi seemed reluctant to proceed with Bassil’s plan because it entails borrowing more money from the market, a step that is certain to raise the budget deficit.

The energy minister rejected the recommendation of some ministers to seek loans from Arab funding bodies at very low interest rates with long maturity.

The Byblos chairman warned that Lebanon can’t afford to sleep on the electricity crisis for a long time as this would make conditions even worse.

He also stated that he strongly favors a partnership between the private sector and the government.

“The energy minister’s plan is perfect, but its execution is very dangerous because the government has to borrow more money and count more on service providers,” the banker explained.

He believes that the best choice for the government in respect to energy is to seek one of three options: private and public partnership, Build Operate and Transfer schemes, and concessions.

“The government must first complete all the administrative appointments and create an energy regulatory authority to ensure that all the projects implemented are done in a transparent manner,” the banker said.

He also expressed fear that tenders will be awarded to companies that are close to political parties in the country.

He said Safadi’s budget is close to LL21 trillion, meaning that the public debt will rise considerably.

Bassil also rejected raising taxes at this critical moment. “Taxes will scare away investors. The government should improve collection of taxes instead of contemplating higher ones,” he said.

Asked about the projected profits of Lebanese banks in 2012, the chairman said he expects net income this year to fall slightly compared to 2011 if the situation remains unchanged.
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Old February 3rd, 2012, 12:06 PM   #944
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Business outlook uncertain in 2012
February 02, 2012 02:05 AM By Mohamad El Amin The Daily Star

BEIRUT: Wages will increase by an average of 6.5 percent across Lebanese industries throughout 2012 to be partially offset by a 5.8 rise in inflation, a study published Wednesday by Hay Group, an international human resources consultancy, forecast.However, the study, which analyzes data gathered from 13,000 employees across 100 Lebanese businesses, anticipates a long period of uncertainty as many businesses remain reluctant to implement a recent government decision to increase wages.

“Pay is an emotive topic in Lebanon following the changes put forward by the Cabinet. Organizations who took part in our study forecast a modest increase in overall compensations of 6.5 percent given that it will be months before any changes can be implemented within organizations,” Wendell D’Cunha, a manager at Hay Group said in a briefing in Beirut.

The Cabinet had decided in mid-January to increase salaries for private sector employees setting the minimum wage at LL675,000, up by some LL175,000. Other salaries would increase by a maximum of LL299,000.

The study reveals that wage increases in 2011 were reported by surveyed businesses at a solid 6.9 percent, only to be offset by a 5 percent rise in inflation.

“The increase in 2011 matched Hay Group’s forecast based on company data, levels of economic growth and inflation in Lebanon. Real salary growth was modest at 1.9 percent after accounting for inflation at 5 percent. This gives a more accurate reflection on employee’s true increase in purchasing power,” D’Cunha said.

The report expected that the overly inflated wages reported in 2009 could be seen again in late 2012 after the wage hikes are implemented.

“We will see significant rises in pay in the near to mid-term future. This will have a wider impact on the Lebanese economy, as was the case in 2009 when the last amendments to the labor law were passed,” D’Cunha added.

Lebanon’s unique human capital, the report argued, is both a challenge and an opportunity for employers as the job market remains influenced by other regional markets, where Lebanese are active participants.

“Lebanon has a highly educated and skilled workforce including a sizeable diaspora working in Gulf countries. When these global nomads return home, they have heightened expectations of employee packages. In tandem with this, Lebanon has a relatively high unemployment rate especially among the younger generation and this allows employers to have the pick of the talent,” said the report.

According to the report, the highest paying industry sectors in Lebanon are construction and construction material related industries. Employees in these sectors command a premium and are paid 6 percent above the general market. The consumer goods sector also pays 4 percent above the market average across other sectors.

The report suggests companies’ recruitment remains focused on hiring in the sales, marketing and administration job functions this year. Jobs in engineering, finance and accounting, as well as research and development, are also high in demand, according to the report.

Companies report 75 percent sales as the key job function they require for achieving growth, the report said.

However, not all companies are upbeat about hiring prospects, despite significant improvement recorded in comparison with past years.

The study said: “14 percent of businesses surveyed have expressed difficulty in retention of their staff compared to a higher 19 percent and 29 percent in 2009.”

The report said employee turnover ranged from 3 percent to 18 percent while the median is 8 percent. New joiners on the other hand ranged from 7 percent to 24 percent, while the median is 16 percent.

Employee turnover is a statistical figure showing how long employees tend to stay at a given workplace. The higher the rate the more likely employees are to change their jobs in any given year.

“Lebanon has a talented and internationally mobile workforce and employers will face challenges over the coming months in motivating and engaging these employees during a period of uncertainty,” the study concludes.
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Old February 3rd, 2012, 12:11 PM   #945
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Accounts court to submit final report on gasoil scandal February 02, 2012 02:06 AM The Daily Star


BEIRUT: The Court of Accounts will submit its final report on “the red gasoil scandal” Tuesday as fuel prices continued to climb for the seventh week in a row.

“We are currently in the process of a final review of the report after a primary report was finalized earlier. Head of the court Aouni Ramadan informed Prime Minister Najib Mikati of the investigation’s updates and its primary results today [Wednesday],” the COA attorney general told the Central News Agency.

Sources close to the court had told The Daily Star earlier that 10 public employees were being named in the investigation. Bassam Wehbe told the CNA that the court’s investigation was focused on exposing the role of around 100 distribution companies who were involved in the hoarding of VAT-free gasoil.

Last week, the Court of Accounts launched an investigation into allegations that distribution companies had profited illegally by purchasing $80 million of red gasoil that had been exempt from value added tax but made the gasoil available to consumers only after the government resumed charging VAT.

Reports said distribution firms illegally reaped an estimated $800,000 in profits in 24 hours.

But oil sector experts suggest hoarding was taking place throughout the VAT-free period.

The prices of gasoil and diesel are expected to fall once Parliament convenes and approves a recommendation by the parliamentary Budget and Finance Committee to permanently exempt the commodity from VAT.

This measure would prevent distribution companies and gas station owners from profiteering from hoarding VAT-free gasoil. – The Daily Star
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Old February 4th, 2012, 08:15 AM   #946
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Plenty of solutions to electricity crisis, but no will February 04, 2012 01:52 AM By Osama Habib The Daily Star.

BEIRUT: Energy experts and officials are still at loggerheads over the best way to end the long-running electricity crisis with some favoring full or partial privatization of the sector while others insisting that the state can do the job.

This debate has jeopardized all attempts to tackle the electricity crisis as the current government failed again to allocate the necessary money to finance Energy Minister Gibran Bassil’s plan to boost production by 700 MW.

All sides agree that more investments are needed for the electricity sector.

They also agree that most of the existing power plants may stop functioning one day due to their old age and lack of maintenance.

But these discussions have proven futile while the state of the electricity sector has deteriorated further with power rationing reaching its highest levels since the end of the Civil War.

“It is the duty of the government to end the electricity crisis and to give affordable and efficient power around the clock,” Roudy Baroudi, a leading energy expert, told The Daily Star.

Baroudi argued that rehabilitating the electricity sector was not a big deal if true intentions were available.

“We are not reinventing the wheel. The most important thing is to have political consensus on whatever plan they have at their disposal,” he said,

Baroudi added that no major investment had been made in the sector since 1998.

“If Lebanon has between 4 and 5 percent growth in energy need then investment in this sector is badly needed. However, no such investment has taken place since 1998 and this has made the situation worse,” he said.

It has become common knowledge that the current electricity production which now stands at 1,500 MW is not sufficient to meet the growing demand for electricity.

To meet the current demand, energy experts say that production should rise to at least 2,400 MW, adding that even this goal may not be sufficient in the next four to five years due to population growth and the construction of more housing units, factories and malls across the country.

Bassil and his bloc accuse Prime Minister Najib Mikati of withholding funds from the Energy Ministry to implement the 700 MW plan.

They reiterate that Lebanon will lose $1.2 billion each year if electricity production is not boosted and new alternative energy secured.

Bassil refused to negotiate with the Arab funds for a soft loan, claiming that this process was too long and tedious.

But Mikati and Finance Minister Mohammad Safadi have said repeatedly that ending the electricity crisis is in the interests of all Lebanese, irrespective of their political affiliation.

However, Mikati and Safadi want all the contracts for the electricity plants to be handled by the regulatory authority for energy which has yet to be formed by the Cabinet.

Baroudi said it was in the interests of the government to appoint the regulatory authority to ensure all the transactions and contracts were awarded in a transparent manner.

“If a firm or a mall experience a power cut for an unknown reason they can complain to the regulatory authority to take the proper measures,” he said.

Baroudi supports the idea of standby electricity such as power barges and standby power plants that can be easily installed next to existing power stations.

“The government can rent these standby plants for two or three years until the construction of new stations in the country are completed,” he said.

But a former senior official, who spoke on condition of anonymity, told The Daily Star that the former government refused to endorse a plan submitted by the former energy minister to install standby power plants under different pretexts.

“It is not true that there is a liquidity crunch. If the government can issue $1 billion in Eurobonds to raise money this issue is usually oversubscribed. If they [government] can raise money through Eurobonds then why can’t they do the same for electricity,” he asked.

The former official said the state was already incurring $1.5 billion in losses due to the electricity crisis.

“If the former government had agreed to install the standby plants three years ago this would have given ample time to build more plants in the country to reduce the rationing,” he said.

Baroudi and the former official warn that the existing power plants may stop functioning without any prior warning.

“These plants are not designed to run forever. They will run out of steam if they are not upgraded immediately,” the former official warned.

Lebanese banks have offered the state a chance to take part in the rehabilitation of electricity either through a build, operate and transfer system or through a partnership with the state.

Bur to this date, the government and the Energy Ministry have not engaged in any serious talks with the commercial banks on the modernization of the electricity sector.
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Old February 4th, 2012, 08:16 AM   #947
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Mabroukkkk,we won't have any electricity one day
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Old February 4th, 2012, 11:38 AM   #948
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YAAAAAAAAAY

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Lebanon, Gateway to the Sun, Doorway to man's Spirit !
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Old February 5th, 2012, 08:23 AM   #949
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Dim and dimmer
Shane Farrell, February 5, 2012

Over 20 years after the end of the civil war, Lebanon still can't solve its electricity problem, causing the nation anger over long shortages. (AFP photo)
Twenty-four hours of electricity a day, a privilege many in even less-developed countries than Lebanon take for granted, remains a pipedream here, at least for the short to medium term. Lebanon currently has available around 1,500 megawatts of power, with a demand of 3,000 megawatts during peak summer season. Meanwhile, power plants and electricity supply lines are old and in frequent need of repair or maintenance, which largely explains the sharp reduction of power experienced across Lebanon in the past month.

The situation is certainly not helped by political squabbling between rival parties, which delays decisions to improve the situation.

In the longer term, a $1.2 billion package was approved by the cabinet late last year for a project that will increase Lebanon’s energy output by 700 megawatts. According to Raymond Ghajar, the spokesperson for Energy Minister Gebran Bassil, the tender for this will be launched “within a month or so.”

However, 700 megawatts is still insufficient to meet demand at current levels, let alone in several years’ time when it is estimated to be implemented.

Following criticism of his performance by politicians and people protesting the increased electricity problems, especially in areas outside Beirut, Bassil has placed blame on his predecessors and rival politicians, whom he argues are obstructing his work.

Future MP Mohammad Qabbani, who heads the parliamentary committee on energy and is one of Bassil’s harshest critics, says that the solution to the problem is to privatize the sector, in accordance with Law 462, which was passed in 2002 but has not been implemented.

Qabbani told NOW Lebanon that “The minister does not want this to be done because he wants to run individually a sector that has billions of dollars in it. The only reason for that is corruption.”

Ghajar disputed the accusation that the ministry is blocking Law 462, saying that it has made its required amendments and submitted the draft to the cabinet. “This has to go back to parliament… We already did our work a month ago.”

Another element in the dispute is foreign assistance, both monetary and material. Bassil rejected Arab funding to finance the electricity plan because he said he had sent a set of conditions to the fund six months earlier, but had not received a response. Several Future bloc MPs claim that Bassil said there is no need for financial aid.

Recently, Iran offered to provide Lebanon with 500 megawatts in one year, bringing it up to 1,000 after a second year, through the construction of electricity stations as well as providing electricity via Syria, which would take six months. However, this has received criticism by Future bloc MP Assem Aaraji, who said that this would come at a “political cost.” Qabbani, on the other hand, told NOW Lebanon that he would be “ready to accept any support in the field of generating electricity, whatever the source is [so long as] it should be transparent and have good conditions for Lebanon.”

Meanwhile, Denmark has offered to construct windmills capable of generating 140 megawatts of electricity in the north of the country that would then be sold to the Lebanese state. If the project were agreed to, the windmills would be functioning in 13 months, according to Qabbani, who does not believe the offer will be accepted by the Energy Ministry.

But none of this improves the situation in the short-term. For that, Bassil is pushing for offshore boats with generators that would supply a yet-to-be-agreed-upon amount of electricity to the country during peak demand season, a similar situation to what occurred last summer. Ghajar told NOW Lebanon that the details of this would have to be discussed, although he hopes the project would be implemented before the summer.

Qabbani is critical of this move, however, saying that it is not an investment, but merely a stopgap solution.

In another development, discussions are ongoing about reducing the amount of electricity allotted to Beirut in order to resupply other areas of the country that experience up to 12 hours of blackouts per day. This is a move Bassil is pushing for, and which will need the cabinet’s approval, according to Ghajar, as the government previously decided to guarantee around 21 to 22 hours of electricity to the capital per day.

“We can’t do that unless the government revokes its previous decision [to offer Beirut 21 hours a day].”
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Old February 5th, 2012, 08:39 AM   #950
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Old February 13th, 2012, 03:47 PM   #951
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Quarter of Lebanese firms will be hiring soon
February 13, 2012 02:14 AM

The Daily Star


BEIRUT: Around 24 percent of Lebanese firms will “definitely be hiring” in the next three months, according to a poll conducted by regional job search website Bayt.com and consulting firm YouGov.The percentage is forecasted to significantly increase to 68 percent within a year, the study showed.

But it added that hiring expectancy in the coming months would be slightly lower than it was in the fourth quarter of 2011.

Of the 54 percent of companies in Lebanon that are “definitely” or “probably” hiring throughout the next three months, the majority (42 percent) will be looking to hire less than five people, while 25 percent reported that they will look for 6 to 10 new employees.

Across the region, 31 percent of respondents prefer candidates with strong computer skills and prior experience in a managerial role.

In Lebanon, team management proved to be the most sought after experience to 36 percent of the corporate respondents, followed jointly by computer skills and sales and marketing experience, according to 25 percent of the respondents.

The survey highlighted the three most desirable skills for Lebanese employers as the ability to be a flexible team player (50 percent); good communication capabilities in English and Arabic (44 percent) and the ability to work under pressure (43 percent).

The top five academic qualifications most desired by local employers are business management (34 percent), computer science (24 percent), engineering (23 percent), administrative qualifications (22 percent) and information technology (20 percent).

“Employment trends are relatively similar across the region, with roughly a quarter of MENA companies considering hiring new staff in the coming months, and in a year’s time,” said Bayt.com vice president Suhail Masri.

The data for the survey was collected online from Jan. 2 to Jan. 24, 2012. Results were reported on a base of 9,238 respondents.

Countries that participated are the UAE, KSA, Kuwait, Oman, Qatar, Bahrain, Lebanon, Syria, Jordan, Egypt, Morocco, Algeria, Tunisia and Pakistan.
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Old February 13th, 2012, 03:52 PM   #952
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Real advertising expenditures in Lebanon slip 3.3 pct in 2011

February 13, 2012 02:14 AM

The Daily Star



BEIRUT: Real advertising expenditures in Lebanon slipped to $174 million in 2011, shedding 3.3 percent from $180 million in 2010, according to a forthcoming report in Arab Ad magazine. The advertising sector results were disappointing following a rapid growth of 15.4 percent in 2010 and 18.5 percent in 2009, according to Arab Ad, as reported by Byblos Bank’s weekly newsletter. The full report is due to be published in the February issue of Arab Ad.

Television attracted most of the expenditures reporting revenues of $65.5 mln (37.6 percent), followed by outdoor billboards at $45 mln (26 percent), newspapers with $32 mln (18.3 percent), magazines with $14.5 mln (8.3 percent), radio with $12 mln (7 percent), online with $3.5 mln (2 percent) and cinemas with $1.5 mln (1 percent).

The report said cinema advertising rose sharply in 2011 by some 25 percent. Online advertisements also registered a significant 6-percent growth followed by television advertising which continued to grow registering a decent 4-percent growth.

However, newspaper advertising dropped by 14 percent, followed by outdoor billboard ads, which declined by 6 percent. Radio advertising revenues also fell by 4 percent, followed by magazines, which registered a 3-percent decrease.

In terms of revenues, LBCI television station topped the list. An-Nahar came first among newspapers and Nadine was the top social weekly publication, the report added.

The report said Sawt al-Mada came first among non-music radio stations and Sawt al-Ghad ranked first among music radio stations.

The company Transmed was the biggest individual spender on advertising in Lebanon, followed by Khalil Fattal & Fils, L’Oreal Liban, Solvid, Amana Care, Nestle, Abi Ramia Brothers, Fransabank Group, BankMed and Obegi Consumer Products.

Further, Marinas Turbo was the top-advertised brand in all media, followed by XXL, Freeze, BankMed, Moukarzel, Fransabank, Bank Audi, Sedar, Buzz and BLOM Bank.

The report showed BBAC and Byblos Bank were the top two advertised brands in Lebanese cinemas, while BankMed was the most advertised in the press.

Marinas Turbo was the top advertised brand on television, Samsung was the most advertised on outdoor billboards, and BO18 Classic spent the most on radio promotions.

The report indicated that political news bulletins attracted 32 percent of total TV advertising, followed by comedy programs which attracted a 9-percent share.

Political subjects attracted 37 percent of print advertising, followed by social news with 16 percent.

It also added that the hygiene and beauty care sector was the top spender on advertising last year, while advertising by the automotive sector dropped sharply following cuts of 50 percent on budgets allocated for television campaigns.

According to IPSOS-STAT, monitored advertising expenditures in Lebanon reached $1.24 bln in 2011, almost unchanged from 2010. It said the discrepancy between monitored rates and the actual rates (which are not publicized) remains 7.1 larger than real advertising expenditures.

The trend is attributed to big discounts, inflated rate cards, big barter deals and a lack of transparency in the industry in reporting earnings.

Monitored spending on TV is up to 14.3 times larger than actual spending, followed by radio with a 4.1 ratio, magazines with a 3.9 ratio, outdoor billboards with a 3 ratio, newspapers with a ratio of 1.7, and cinema at a 1.6 ratio.
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Old February 15th, 2012, 05:46 AM   #953
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Minivans hike fares by LL500, citing gas prices, wage increase February 14, 2012 02:04 AM The Daily Star


BEIRUT: Beirut’s cheapest way of getting around became less of a bargain after minivan drivers across the capital hiked fares from LL1,000 to LL1,500 Monday, citing rising gasoline prices and a recent wage increase decision.

The head of Al-Walaa Transport Association Abdallah Hamadeh, which represents most minivan drivers, told The Daily Star the decision was taken independently by driver groups without consulting transportation unions.

Hamadeh said the unions were not involved directly in the decision, which remains unofficial but had already taken effect as of Monday.

But he added that the unions understood the reasons behind the step.

“The drivers are no longer capable of keeping the fares at a low level. At LL1,000, they can barely make ends meet,” he said. “They [drivers] do not benefit from the [recent] wage increase decision but will suffer from the consequences of the measure in terms of increases in prices and rent.”

In a statement issued Monday, Transport and Public Works Minister Ghazi Aridi said his ministry was the only authority in charge of reviewing fares for public transportation.

“I hope no side takes a wrong step,” he said, warning that his ministry would clamp down on arbitrary increases in fares. “The current fares are still valid and will stay unchanged until reviewed by the ministry [and] everyone should abide by it.”

According to Hamadeh, a lack of government regulation of the public transport sector is wreaking havoc on both the drivers and customers.

Popular minivan routes in Beirut include the No. 2 minivan from Hamra to Ashrafieh, the No. 5 from the airport to Dawra, and a No. 4 from Hamra to Hadath.

Abdallah Najdi, head of the Association of Public Transport Unions, said that the service taxi and regular bus fares remain unchanged at LL2,000 and LL1,000 respectively.
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Old February 15th, 2012, 12:56 PM   #954
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Gasoline up by LL500, diesel up by LL300
February 15, 2012 09:54 AM

The Daily Star



BEIRUT: Gasoline prices rose Wednesday by LL500 over last week for the 98-octane graded gasoline and LL400 over the same period for the 95-octane graded gasoline.

The price of 98-octane graded gasoline is now LL35,00, while the price of 95-octane graded gasoline is now LL34,300.

The price of diesel was up LL300 over last week and now costs LL30,100. The price of fuel oil, according to the latest fuel price update by the Energy and Water Ministry, is also LL30,100.

Diesel prices jumped late January after the lifting of an approximately month-long LL3,000 subsidy on the fuel.

Kerosene was up LL200 over last week and now costs LL29,200.

All prices are per 20 liters.
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Old February 16th, 2012, 07:50 AM   #955
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Fuel prices rise in line with global trends February 16, 2012 01:33 AM The Daily Star


BEIRUT: Gasoline and fuel prices continued to rise for the fifth week in a row. According to a statement by the Energy Ministry, the price of 98-octane graded gasoline price rose by LL500 to LL35,00, while 95-octane graded gasoline rose by LL400 to LL34,00.

The price of diesel is up LL300 and now costs LL30,100. The price of fuel oil is also LL30,100. Kerosene was up LL200 and now costs LL29,200. All prices are per 20 liters.

In an interview with The Daily Star, the head of the Oil Importers Association Maroun Chammas reiterated that the increase in fuel prices is a result of a hike in oil prices globally.
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Old February 18th, 2012, 01:39 AM   #956
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Government threatens to cancel permits of drivers hiking rates
February 18, 2012 02:06 AM

The Daily Star



BEIRUT: The government threatened Friday to cancel the license of any taxi or minibus driver who refuses to comply with official rates.

This move came following a meeting headed by Prime Minister Najib Mikati at the Grand Serail and attended by Interior Minister Marwan Charbel and Public Works and Transport Minister Ghazi Aridi along with representatives of the transportation and public buses unions.

The government took the decision after some minibus drivers shut the roads in the southern suburbs with burning tires and rocks to protest the attempts of Aridi to enforce the old fares on all the drivers.

Sources said that many minibus drivers called off their strike and removed all roadblocks after the government threatened to revoke the licenses of striking drivers.

Some of the minibus drivers had raised their fares from LL1,000 to LL1,500 per passenger under the pretext of high gasoline prices.

The Finance Ministry agreed three months ago to subsidize bus and taxi drivers in an attempt to alleviate the high cost of fuel for the drivers.

“One of the big bus transportation companies committed the grand sin when it unlawfully hiked the rates, although they realize the government had subsidized the cost of fuel three months ago,” Aridi told reporters at the Serail.

He added that the ministry is willing to discuss the grievances of all drivers in an open mind but it will not tolerate any person who acts on his own and without consulting the ministry.

“The drivers have the right to strike but they don’t have the right to close the roads and force the passengers out of the minibuses and taxis,” Aridi said.

He added that the behavior of some taxi and minibus drivers is appalling, noting that some passengers were assaulted just because they were riding other cabs and minibuses.

Aridi called for a meeting with the finance minister and drivers unions to discuss the surge of gasoline prices.
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Old February 18th, 2012, 01:54 AM   #957
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Trouble ahead as Parliament mulls rent law reform February 18, 2012 02:06 AM By Paula Jahn The Daily Star


BEIRUT: With some old apartments in prime Beirut locations being leased for as low as $120 a year, politicians and economists agree that the country’s outmoded rental system is due for a makeover.

But as Parliament debates proposed changes, experts warn of trouble ahead for landlords and tenants alike.For landlords, the problem is simple: Rents paid by the tenants according to the old law are far lower than the prevailing prices in the market, and what was good in 1992 no longer applies.

According to the vice president of the Committee for the Rights of Tenants Laws, the old law has allowed some 170,000 of the Lebanese capital’s 210,000 tenants to pay rent substantially below market value.

That value has increased immensely due to triple-digit inflation over the past two decades.

But with wages still lagging far behind rising prices, many Beirut residents could find themselves forced to move, not only from homes they have lived in for decades but also from a city that has suddenly become unaffordable.

And although apartments can be leased for prices set by the market, once Parliament scraps rent controls – probably in the next couple of years – landlords also have reason to worry.

Economist Ghazi Wazni forecasts a glut of rental property that few will be able to afford. “Supply will grow, and demand won’t compensate,” Wazni says. “We will see the Lebanese real-estate market in a quasi-freeze.”

Leases on apartments signed before 1992 are governed by a rental law drafted in 1975 that worked only as long as inflation was kept in check.

But by 1990 the Lebanese lira – worth nearly 50 cents in 1975 – was valued less than 0.05 cents. The Central Bank finally pegged the lira in 1995 to LL1,500 per dollar, where it remains today.

At the same time, driven by foreign investors, Lebanon’s real estate market boomed, with a two-bedroom flat in a desirable Beirut location now worth around a $700,000, up from around $300,000 few years ago.

But that bubble could be about to burst. And if it does, it will compound potential problems for owners already sitting on real estate they are unable to lease out because the end of rent controls have made their apartments unaffordable for the majority.

The real estate downturn that had already begun in 2010, parallel with external regional crises, shows no signs of recovery.

An IMF report earlier this month said “domestic demand is depressed, slowed down by falling investments.”

The IMF blamed “regional uncertainty,” and Wazni echoes those concerns, noting that Lebanon’s “economic situation is tied very much to the political situation.”

The volatile situation in neighboring Syria, which used to have a strong influence on the country, has also dealt another blow to the country’s real estate market with sales in 2011 falling by more than 18 percent.

With so many problems, economists say that the new real estate law will likely come with built-in cushions.

Details being weighed in Parliament include protecting tenants by requiring landlords to give them up to eight years notice. Landlords in turn would have the option of speeding up that process by buying out tenants, paying them up to 20 percent of the value of the apartment if they leave immediately. Also being contemplated are bank credit facilities allowing tenants to find alternate housing during the transition phase.

But the changes come with a price tag that will have to be picked up by the government, notes economist Ramzi Mabsout.

In other words the government may subsidize part of the interest rates on the loans the tenants will obtain from commercial banks to buy new apartments outside the capital.

This, according to Mabsout, will further strain the government’s budget.

And the new law could poke an even bigger hole in the shrinking real estate bubble, with an increase of rental space after old tenants leave – and few new tenants available to pay rents that now are higher than they had previously paid.

Wazni projects that once the law is put into place, “there will be no more interest from investors in the real estate market, neither domestically nor from abroad.”

Meanwhile, economist Simon Neaime says that “the expected excess supply will for sure lower the existing real estate prices, putting further downward pressure on a real estate market already affected by the regional geopolitical turmoil.”

However, not all real estate brokers and developers share this view.

The IMF report noted a shift in the market, saying that while “the boom was driven by the luxury apartment segments, demand has shifted to small apartments.” This is bad news for luxury real estate owners but could benefit landlords of more modest units, as former tenants move out from homes made unaffordable by the end of rent control and look for cheaper lodging.

Realtor Raja Makarem says the new law could encourage investors to “increase investments into buildings targeting low income families,” leading to a boom in pre-rental renovations.

He also expects many tenants to reach agreements with landlords on new leases that slowly adjust rents to the market instead of sudden jumps.

“An oversupply of apartments is out of the question,” he says.

Fellow realtor Tony Abou Rizk agrees, saying demand will continue to exceed supply in Beirut due to excessively high land prices that restrict new home construction.

“Even if the supply is increased, prices will be unlikely to drop,” he said.
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Old February 21st, 2012, 03:49 PM   #958
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Beirut apartments second most pricey in MENA
February 21, 2012 01:43 AM

The Daily Star


BEIRUT: Beirut apartments are still among the most expensive in the MENA region, and Lebanon’s real estate trend is unlikely to remain sustainable, said a recently issued report.

The report, dubbed “Global Property Guide,” ranked Beirut in 50th place in terms of the price of an average apartment.

Regionally, Beirut ranked second only behind Dubai, the Byblos Bank weekly newsletter said, quoting the same report.

The average price per one square meter in Beirut was put by the report at $3,223, higher for instance than in Saint Croix in the U.S. Virgin Islands, Manila and Buenos Aires, but lower than cities like Bangkok, Dubai and Riga.

Beirut was ranked in 35th place globally and first place in the region in terms of the price of an apartment relative to its rent, or the price-to-rent ratio. This ratio reflects the years of rent that are required to buy a property, and is typically used for measuring the undervaluation or overvaluation of real estate prices.

At 22, higher than the Arab average of 16, the figure indicates that it could take up to 22 years of rent to cover the purchase price of an average 150-square-meter apartment in Beirut.

But the report warned the trend of high prices coupled with low rent yields is unhealthy and is unlikely to be sustained over the long term.

Beirut ranked in 36th place among 82 markets globally and also in second place regionally in terms of average per month rent of a 150-square-meter apartment.

Beirut’s average rent was $1,872 for a 150-square-meter apartment, higher than the Arab average of $1,526 per month.
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Old March 27th, 2012, 12:41 PM   #959
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Oil sector to hold three-day strike March 26, 2012 04:52 PM The Daily Star


BEIRUT: Lebanon's oil sector plans to hold a three-day strike next week over demands that the government allow gas stations to increase the surcharge they impose on customers, President of the Association of Oil Importing Companies Maroun Chammas announced Monday.

Speaking at the association’s headquarters, Chammas said that the Cabinet’s decision to increase the minimum wage has become a burden on oil importing companies.

"There are rights that cannot be neglected and consequently we can't accord one sector preferential treatment over another, particularly since [we are forced] to pay the increase in wages by the Cabinet,” Chammas told reporters.

According to Chammas, the sector is demanding an increase of LL820 on the overall price of 20 liters of fuel to be distributed as follows: LL500 to be added to the surcharge accumulated by gas stations, LL120 for oil transporting tanks, and LL200 for oil companies.

The strike is scheduled to take place on March, 2, 3, and 4.

Chammas also left room for a solution to prevent the strike, which would cripple the country’s economy and possibly cause a fuel shortage.

“Our hands are extended to all those concerned in this matter, especially Energy and Water Minister Gebran Bassil and Economy Minister Nicolas Nahas and Prime Minister Najib Mikati,” he said.

Bassil has rejected the demands of the station owners, saying their actions resemble those of a mafia.

Many gas stations around the country complied last week with a strike called by the petroleum sector over the same demands.
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Old April 12th, 2012, 11:51 AM   #960
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Official statistics show consumer price index up by 3.4 percent April 12, 2012 01:45 AM The Daily Star


BEIRUT: The Consumer Price Index rose by 3.4 percent in February 2012 compared to the same period last year while inflation was up 0.8 percent since January 2012, according to figures released Wednesday by the Central Administration of Statistics.

Various consumer protection groups have long cast doubt on the veracity of the numbers issued by the Central Administration of Statistics.

According to Consumers Lebanon, prices have increased by more than 5 percent since deliberations over a wage increase started some months ago.

However, Economy Minister Nicolas Nahhas told The Daily Star Tuesday that so far no correlation has been spotted between the wage hike that took effect in February and the consumer price index.

Nahhas added that the impact of the wage hike has yet to materialize, saying that it is too early to judge its effect on the economy.

According to the Central Administration of Statistics, the price of food and nonalcoholic beverages rose by 0.6 percent year-over-year in February 2012, while the price of alcoholic beverages dropped 0.4 percent.

The cost of furniture and household equipment rose by 0.2 percent. The cost of health care increased by 0.7 percent.

The cost of leisure-related activities rose by 0.2 percent. Prices at restaurants and hotels went up by 1.3 percent.

The report also showed a rise of 3.2 percent in transportation costs.
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