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Fitch downgrades Lebanon

Fitch Ratings on July 14 downgraded Lebanon's long-termforeign- and local-currency issuer default ratings to B- from B, with stableoutlooks.

The agency affirmed Lebanon's short-term foreign-currencyissuer default rating at B while the country ceiling was lowered to B- from B.

The issue ratings on Lebanon's senior unsecured foreign- andlocal-currency bonds were downgraded to B- from B.

The downgrades reflect the agency's view of the politicalrisks from the ongoing Syrian war; very weak public finances; and"anaemic" economic performance.

Fitch said it expects real GDP growth to remain below 2% in2016, with no major improvement in growth prospects before the end of theSyrian conflict.

Fitch noted that the banking system is attracting enoughdeposits to fund government borrowing while at the same time ensuring moderategrowth of credit to the resident private sector. Still, the agency noted,growth in total private sector deposits in commercial banks slowed to 4.1% inMay from 5.0% a year ago.