BEIRUT, Sept. 5 (Xinhua) -- Fitch Ratings said Tuesday that Lebanon's economic outlook is stable thanks to excess liquidity in banks and the election of a president.
But it warned that high public debt and weak economic performance are among the serious challenges facing the country.
Fitch kept Lebanon's credit status at "B-" with a stable outlook on Friday.
"Lebanon's ratings reflect very weak public finances, high political and security risks and anemic economic performance," Fitch said in a report.
Other international ratings agencies have downgraded Lebanon's long-term deposits due to the mounting public debt, high political risks and slow pace of reforms.
All of these agencies pinned hopes on the government's efforts to reduce the budget deficit as stated in the budget presented by the Finance Ministry.
Fitch stressed that the passage of two crucial decrees that pave the way for offshore gas exploration is a step in the right direction.
"The new government approved two decrees in January to resume its first round of oil and gas exploration licensing (delayed since 2013); sent a draft 2017 budget to Parliament; and agreed finally in June on a new electoral law and settled a date for the next election (May 2018), narrowly averting a new political crisis," the rating agency added.
Fitch noted Parliament approved the new electoral law, followed by a salary scale adjustment, a raft of revenue measures and a long-delayed public-private partnership law.
"Also in May, the government renewed the term of the Central Bank governor Riad Salameh, ending months of uncertainty over the matter," Fitch added.
It noted that the outlook of Lebanon's fiscal consolidation remain unclear, despite the government's measures to reduce the deficit.
It added that the tax measures proposed by the Finance Ministry intend also to reduce the annual budget deficit in addition to financing the salary scale.
It projected the deficit to shrink if the taxes are applied before the end of the year.
Fitch stressed that the foreign currency reserves accumulated by the Central Bank since May 2016 would enable Lebanon to weather any unforeseen financial crisis in the future.
