Credit rating agency Moody’s downgraded Lebanon’s government bond rating from B1 to B2 with a negative outlook, due to the country’s high debt burden, external deficits, and challenging political environment. The negative outlook mirrors the impact of the current civil war in Syria on Lebanon’s economy, which has led to lower growth, larger fiscal deficits, and a reversal in public sector deleveraging. Moreover, Moody’s expects growth to reach 1.8% for 2014 and 2.5% for 2015.
According to the report published on the 16th of December, Moody’s states that an upgrade of Lebanon’s sovereign rating is unlikely over the medium term. Nevertheless, the rating outlook would be returned to stable in case the country’s debt metrics stop rising and risk of political spill-over from the Syrian conflict fades.