Global credit ratings agency Standard & Poor's revised its outlook for Lebanon to stable from positive on Tuesday as a political crisis continues to grip the Middle Eastern country. "The stable outlook reflects our view that while the government's control over the economic and political agenda has been diminished, outbreaks of civil unrest in the country will be avoided," the agency said.
S&P also affirmed Lebanon's B/B sovereign credit ratings as well as the country's "4" recovery rating. "In the near term, we ... consider that it will be difficult for Lebanon to make much headway on the achievement of much-needed structural reform, especially in the public sector," read the statement.
"This, together with political stability, would in our view be required to put the Lebanese economy on a sustainable growth path over the medium term, to support a sustained improvement in the fiscal deficit and maintain confidence in the banking system."
The statement comes after Shiite party Hezbollah forced the collapse of Saad Hariri's unity government on Wednesday in a long-running dispute over the UN-backed Special Tribunal for Lebanon (STL). S&P had expected large fiscal and current account deficits for 2011, forecast at 7.5 percent and 19 percent of gross domestic product (GDP) respectively, prior to the government collapse.
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