Moody's stated, “the announcement of the formation of the Lebanese Government is credit "positive" as the new Government presided by Saad Hariri, will implement necessary fiscal reforms to unlock the $11 billion five-year investment package committed by international donors during the “CEDRE conference” in April last year.”
Moody's statement expressed satisfaction with the formation of the new government saying the move paves the way for fiscal reforms. Eurobonds have risen by 4 percent depending on maturity, and the cost of covering the sovereign risk known as the credit default swap has fallen between 3 and 7 percent on maturity. There was also a slight decrease in the dollar exchange rate between banks. As for the stock exchange, which does not really reflect the movement, due to its small size, there was a shy increase, and the prices of “Solidere” shares also rose.
Despite Moody's positive sentiment, credit risks remain elevated given that very weak growth will challenge the government’s fiscal consolidation efforts.
Source: (Al-Hayat newspaper, edited)
