• Home
• /
• Business

Standard & Poor’s Raises Lebanon Rating, Outlook Positive

The outlook for the rating is positive, S&P said in a statement.

“The upgrade and positive outlook reflect our view that Lebanon’s public finances, and in particular the banking system, have proven resilient in the face of the political turmoil over the past three years,” S&P said.

“Most significant among these developments is the new cross-party consensus that allowed Prime Minister Saad al-Hariri to form a National Unity government in November 2009,” the statement said.

Hariri’s government was endorsed by Parliament after a three-day debate on December 10. The country had remained without a functioning government for months after June elections in which Hariri’s coalition won over Iranian- and Syrian-backed Hezbollah and its allies.

Further improvement in the rating, S&P said, would depend on the government creating a solid track record for “enacting public sector adjustment measures.”

Lebanon has largely shrugged off the effects of the global financial crisis but has public debt of around $50 billion.

“We believe that the new government is prioritizing structural reforms in line with IMF and Paris III recommendations, which include privatization of the telecom and electricity industries, expenditure cuts, and revenue-boosting measures,” S&P said.

The country has a public debt stock forecast at 142 per cent of gross domestic product in 2010, S&P said, which acts as a major constraint on the government’s fiscal flexibility.