BEIRUT: The long anticipated ratings of two of the "big three" credit rating agencies, Fitch and S&P, were finally released this week, with Lebanon’s Eurobonds suffering a setback.
Fitch downgraded Lebanon to CCC while Standard and Poor maintained their rating of B-.
Dollar-denominated bonds issued by the Lebanese government took a tumble on Tuesday due to uncertainty regarding sovereign credit ratings, with stress on the uncertainty of the credit rating by S&P.
“Standard & Poor's (S&P) based its rating on two main points. First, structural reforms in fiscal 2019 will be completed in 2020, especially in the subject of customs, procurement, retirement, tax evasion, and electricity reform, which in its view will reduce the budget deficit,” a source at the Ministry of Finance told Annahar.
The agency, S&P, also cited Finance Minister Ali Hassan Khalil as saying the central bank was able to defend the lira from its reserves.
“Fitch, based on its reduction, cited the challenges posed by the growing pressure on the balance of payments deficit due to the decline in the flow of deposits in the banking sector and the slow implementation of the electricity plan and sector reforms,” a source at the Ministry of Finance told Annahar.
“While the report noted the need for serious work for the 2020 budget and the need for the state to abide by its approval on the deadline, Fitch doubted that recurrent political fluctuations would delay implementation of the desired economic policies,” a source at the Ministry of Finance told Annahar.
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