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S&P Upgrades Lebanon on Bank System

WALL STREET JOURNAL DECEMBER 22, 2009, 12:09 P.M. ET S&P Upgrades Lebanon on Bank System By JOAN E. SOLSMAN Standard  & Poor's Ratings Services raised Lebanon's sovereign-credit ratings and gave  them a positive outlook because of banking resilience and the expectation of  political stability in the medium term.Lebanon benefits from a large and stable depositor base, as well as  financial support from wealthy Arab states but has a large public debt which  hinders its fiscal flexibility. Last month, Prime Minister Saad al-Hariri formed a national unity government.Over three years of political flux, Lebanon's public finances and  especially its banking system remained resilient, according to S&P. In  addition, the new party consensus improves the likelihood of achieving reforms  recommended by the International Monetary Fund and the Paris III conference on  rebuilding the country. These reforms could lower fiscal deficits, cut  government debt-to-gross-domestic-product levels and reduce Lebanon's  liabilities.The agency said Tuesday it expects, conservatively, that the central  government fiscal deficit could fall to 6.3% of gross domestic product in 2012  from 9.9% in 2008.S&P raised its long- and short-term sovereign-credit ratings on the  WALL STREET JOURNAL DECEMBER 22, 2009, 12:09 P.M. ET S&P Upgrades Lebanon on Bank System By JOAN E. SOLSMAN Standard  & Poor's Ratings Services raised Lebanon's sovereign-credit ratings and gave  them a positive outlook because of banking resilience and the expectation of  political stability in the medium term.Lebanon benefits from a large and stable depositor base, as well as  financial support from wealthy Arab states but has a large public debt which  hinders its fiscal flexibility. Last month, Prime Minister Saad al-Hariri formed a national unity government.Over three years of political flux, Lebanon's public finances and  especially its banking system remained resilient, according to S&P. In  addition, the new party consensus improves the likelihood of achieving reforms  recommended by the International Monetary Fund and the Paris III conference on  rebuilding the country. These reforms could lower fiscal deficits, cut  government debt-to-gross-domestic-product levels and reduce Lebanon's  liabilities.The agency said Tuesday it expects, conservatively, that the central  government fiscal deficit could fall to 6.3% of gross domestic product in 2012  from 9.9% in 2008.S&P raised its long- and short-term sovereign-credit ratings on the  Republic of Lebanon one notch to B. Further ratings action will depend on how  much success the new government has in increasing fiscal stability. The rating  would face downward pressure should civil unrest break out or the government  falters in its pursuit of the Paris III reforms.Write to Joan E. Solsman at _joan.solsman@dowjones.com_ (mailto:joan.solsman@dowjones.com)  Republic of Lebanon one notch to B. Further ratings action will depend on how  much success the new government has in increasing fiscal stability. The rating  would face downward pressure should civil unrest break out or the government  falters in its pursuit of the Paris III reforms.Write to Joan E. Solsman at _joan.solsman@dowjones.com_ (mailto:joan.solsman@dowjones.com)    

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