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S&P places Lebanon on CreditWatch with negative implications

S&P Global Ratings placed Lebanon's B-/B long- and short-term foreign- and local-currency sovereign credit ratings on CreditWatch with negative implications, citing the risk to the country's creditworthiness stemming from mounting fiscal, financial and monetary pressures.

The rating agency attributed the action to its view that falling currency inflows could further worsen fiscal and monetary pressures on the country while limiting the government's response to "pressing societal demands." The placement indicates a one in two chance that Lebanon's ratings could be downgraded depending on the government's actions to address such pressures and their effectiveness in restoring depositor confidence.

The agency expects Lebanon's central bank reserves to remain sufficient to pay off government debt in the near term, but it noted that risks to government creditworthiness have increased.

Lebanon's ratings reflect its substantial fiscal and external deficits and increasing public debt levels that are already high, said S&P Global Ratings, which projects net general government debt of 130% of GDP in 2019.

The rating agency forecasts the country's general government deficit to near 9.5% of GDP in 2019-2022 and its gross general government debt to climb to 157% of GDP by 2022 from about 140% in 2018.

S&P Global Ratings plans to resolve the CreditWatch placement in three months. The country's ratings can be affirmed if the government's reform measures prove effective in aiding growth and reducing debt levels over the medium term, the agency said.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings. Descriptions in this news article were not prepared by S&P Global Ratings.