BEIRUT

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Fitch maintains negative outlook on Lebanese economy

File - A flag is reflected on the window of the Fitch Ratings headquarters in New York on Feb 6, 2013. Reuters

BEIRUT: The international rating agency reaffirmed Lebanon’s “Negative” outlook, while maintaining the country’s long-term local and foreign currency Issuer Default Rating, which was unchanged at “B.”

Fitch Ratings also affirmed Lebanon’s senior unsecured local and foreign currency bonds issue ratings at “B,” with the country ceiling remaining unchanged at “B.”

The decision came in a report carried by Credit Libanais Research Unit earlier this month.

The agency attributed the country’s ratings to the relative monetary stability in Lebanon notwithstanding the ongoing turmoil in the region.

The agency praised the resilience of the banking sector, which has demonstrated a strong commitment to supporting the government.

According to Fitch, the banking sector’s main strengths stem from its ample liquidity buffers, added to the strong regulatory environment set forth by the Lebanese Central Bank.

More particularly, total deposits within the banking sector rose by 7.9 percent year-on-year as of the end of April 2014, encouraging local banks to increase their participation in the country’s sovereign debt.

Moreover, Fitch highlighted the success of the Lebanese Central Bank in defending the peg of the Lebanese pound to the U.S. Dollar amid the growing foreign currency reserves accumulated by Banque du Liban and the relative stability of the dollarization rate.

The agency said the major factors constraining Lebanon’s sovereign ratings mainly arise from the political instability in the region, including the war in Syria.

 
A version of this article appeared in the print edition of The Daily Star on June 21, 2014, on page 4.

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