S&P Global Ratings affirmed Lebanon's long- and short-term foreign and local currency sovereign credit ratings at 'B-/B', and maintained its 'stable' outlook on the ratings. It indicated that the 'stable' outlook reflects its expectations that deposit inflows to the financial system will remain sufficient to support the government's borrowing requirements and the country's external deficit over the next 12 months.

The agency pointed out that the government's debt-servicing capacity depends on the financial sector's willingness and ability to continue to subscribe to government securities. In turn, it noted that this depends mainly on non-resident deposit inflows and on financing from Banque du Liban. It considered that the government's reliance on the banking sector's willingness and ability to finance its needs, along with the divisive domestic political environment and regional tensions, constitute structural weaknesses that have constrained the ratings.

S&P considered that the ratings are supported by Lebanon's external profile, as the country's liquid external assets, which consist of foreign currency reserves and the assets of the financial sector held abroad, exceed its external debt. It expected Lebanon's liquid external assets to continue to exceed its external debt through 2021, but it noted that external financing needs are elevated. It anticipated non-resident deposit inflows, largely from the Lebanese Diaspora, to continue to support Lebanon's large fiscal and current account deficits, but to increase the country's external debt level. However, it considered that political uncertainty that would result from delays in the formation of a new government, along with high geopolitical risks, could weigh on investment and deposit growth.

S&P  indicated that it could upgrade Lebanon's sovereign ratings in case the country's policy-making framework becomes more predictable and effective, which would raise Lebanon's growth path above the current trajectory, improve fiscal and external imbalances and put public finances on a more sustainable path.