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S&P downgrades Lebanon’s credit rating amidst ongoing protests

Lebanese demonstrators gather at Martyrs' Square for an anti-government protest against dire economic conditions and new tax regulations on communication on October 18, 2019 in Beirut, Lebanon [Mahmut Geldi / Anadolu Agency]
Lebanese demonstrators gather at Martyrs' Square for an anti-government protest against dire economic conditions and new tax regulations on communication on October 18, 2019 in Beirut, Lebanon [Mahmut Geldi / Anadolu Agency]

S&P Global Ratings said on Friday that it lowered Lebanon’s long-term and short-term foreign and local currency sovereign credit ratings to ‘CCC/C’ from ‘B-/B’, citing rising financial and monetary risks, reported Reuters.

The outlook on Lebanon is negative, S&P said, specifying that it reflects the risk to Lebanon’s creditworthiness from rising financial and monetary pressures tied to recent widespread protests and the resignation of the government.

Nationwide protests driven in part by the worst economic crisis since the country’s 1975-1990 civil war have shut banks and paralysed the country, limiting the ability of many importers to purchase from abroad.

Saad al-Hariri quit as prime minister on October 29 in the face of an unprecedented wave of protests against ruling politicians.

Read: Governor of Lebanon Central Bank reveals Saudi role in deteriorating economy

Mohammad Safadi, a former finance minister, has agreed to be Lebanon’s prime minister if he wins the support of the leading parties, Foreign Minister Gebran Bassil said earlier on Friday.

Confidence in the country’s governance and its economy is falling, which has led to a reversal in bank deposit inflows, S&P noted, adding that the Lebanese government will need external donor support or a major domestic reform package to continue its general government debt.

On Thursday, the ratings agency lowered the ratings on three Lebanese banks – Bank Audi, Blom Bank and Bankmed – further into junk, citing rising liquidity pressures.

READ:  ‘No need to panic’ – Lebanon banking body tells depositors as protests continue

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