Mubasher: Moody's Investors Service changed the outlook to negative from stable on the Government of Lebanon's issuer ratings and affirmed the ratings at B3.
The negative outlook reflects an increase in risks to the government's liquidity position and the country's financial stability, in large part as a consequence of domestic and geopolitical risks that have become more intractable.
The affirmation of the B3 rating reflects Moody's assumption that a government will be formed in the near term and will implement some fiscal consolidation that would unlock the CEDRE public investment package, which in turn would support GDP growth and ease liquidity risks.
The rating affirmation also takes into account the central bank's demonstrated capacity to maintain a degree of financial stability despite very large macroeconomic imbalances and through times of political tensions, although the effectiveness of its financial operations may be diminishing.
