Standard and Poor’s stated that it might lower the credit ratings of Lebanon and three of the country’s largest banks in the next couple of weeks due to the fact that Lebanon continues to be depressed by the existing fragile economic environment, as reflected in the worrisome levels of public debt and fiscal deficit. Moreover, a comprehensive peace settlement remains elusive.
The agency has placed all ratings on the Republic of Lebanon on CreditWatch with negative implications. It assigned a “BB minus” to foreign currency long-term issuer and senior unsecured ratings, a “BB” domestic currency long-term issuer rating and a single ’B’ also local and foreign currency short-term issuer credit and debt ratings.
At the same time, S&P placed on Credit Watch its long-term ratings on Banque de la Mediterranee, Banque Audi SAL and Banque du Liban et d’Outre-Mer SAL, while short-term ratings on Banque de la Mediterranee and Banque Audi SAL were affirmed.
In a reaction to S&P’s Credit Watch, Lebanon’s Ministry of Finance issued a statement forecasting better economic and fiscal performance in the second half of 2000. The ministry said that it expected higher tax revenues by December, and the government would have decided by then on an offer by three cellphone firms to buy new licences worth about $4bn.