Fitch affirms Lebanon sovereign rating

20 January 2003
London-based Fitch Ratingson 20 January affirmed Lebanon's sovereign ratings and said that the outlook was stable. The long-term foreign currency deposit rating is B-, downgraded from B+ in September, and the short term rating is B. Fitch said that the measures being taken to reduce Beirut's crippling public debt of more than 170 per cent of gross domestic product (GDP) were encouraging, but that there remained great risks to the stability of public finances. 'Government debt should stabilise relative to GDP this year,' said James McCormack, senior director of sovereigns. 'But it needs to fall before Lebanon compares more favourable with higher-rated sovereigns.' The financing from the Paris II donors' conference, where Prime Minister Rafiq Hariri secured $4,400 million in concessionary loans, would help reduce the overall debt-servicing burden but would increase the proportion of government debt denominated in foreign currencies, Fitch said. Hariri is struggling to get his stringent 2003 budget through parliament in the face of strong opposition to his tax-raising and benefit-cutting measures (MEED 17:1:03).

On 17 January, the Finance Ministry released a report on economic developments during 2002, putting GDP growth at 2 per cent and the deficit at 42 per cent of GDP. Total revenues were £Leb 4.9 trillion ($3,260 million), compared with £Leb 3.7 trillion ($2,470 million) in 2001, while total expenditure rose to £Leb 7.8 trillion ($5,200 million) from £Leb 7.2 trillion ($4,800 million) the previous year. Debt servicing costs climbed to $3,000 million.

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