Ditch Ratings maintained last week Lebanon’s “Restricted Default (RD)” status on its long-term foreign currency public debt. The agency also announced its intention to withdraw Lebanon’s ratings due to insufficient information caused by the unavailability of key data.
This decision underscores the Lebanese government’s failure to provide essential financial reports to international bodies, exacerbated by the absence of publications on the Ministry of Finance website for the past year.
The lack of data raises concerns about the Ministry of Finance’s technical capabilities, especially regarding human resources. Reports suggest that many Ministry employees have left due to the persisting economic crisis, affecting productivity and the publication of periodic reports. Additionally, multiple strikes by civil servants have likely disrupted the collection and processing of financial data.
However, sources at the Ministry of Finance assured This is Beirut that Fitch has not requested information on figures and reports, unlike other rating agencies to which the Ministry of Finance provides the required information. The Ministry declined to comment on staff shortages or data issues.
The RD rating from Fitch Ratings reflects Lebanon’s default on Eurobonds amounting to $1.2 billion, that was due on March 9, 2020. This rating indicates that Lebanon remains unable to repay its debts.
The “Restricted Default (RD)” rating is assigned when an entity defaults on one or more financial commitments but continues to meet other obligations.
In a press release, Fitch noted that the RD rating signifies the government has not resumed interest payments on the Central Bank’s holdings of government-issued local currency securities.
Furthermore, according to Fitch, Lebanon has a low World Bank Governance Indicators (WBGI) ranking of 14.8. This low ranking reflects the country’s lack of recent peaceful political transitions, relatively weak political participation rights, poor institutional capacity, uneven application of the rule of law, and high levels of corruption.
