Mabrouk! We’re three spots away from the lowest ranking awarded by Moody’s. Yesterday, Moody’s Investors Service has downgraded the Government of Lebanon’s issuer ratings to Caa1 and changed the outlook from negative to stable.
Here’s why we got downgraded AGAIN!
Moody’s decision to downgrade the ratings to Caa1 reflects the heightened risk that the government’s response to increased liquidity and financial stability risks will include a debt rescheduling or other liability management exercise that may constitute a default under Moody’s definition. In December 2018 Moody’s changed the outlook on Lebanon’s then B3 issuer ratings to negative reflecting rising liquidity and financial stability risks.
Compared with Moody’s previous assessment, this higher probability of a default event denotes the rising risk that the government, possessing increasingly limited fiscal and monetary levers to contain or reverse its high debt and interest burden amid deteriorating domestic and external funding conditions, may seek to enhance debt sustainability through other means. The ongoing delay in the formation of a government is adding to Lebanon’s pressures.
In other words, they’re telling us we’re at risk of default unless we form a government and start taking some fiscal consolidation measures that unlock the CEDRE public investment package.
Meanwhile, on a galaxy far far away, our politicians are talking again about a 32-member cabinet.