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.
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 paralyzed the country, limiting the ability of many importers to purchase from abroad.
Saad Hariri quit as prime minister on Oct. 29 in the face of the protests against ruling politicians who are blamed for rampant state corruption.
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.
S&P downgrades Lebanon’s credit rating amid ongoing protests