Moody’s Investors Service, the international rating agency, published on June 6, 2024 a regular rating update on the Government of Lebanon, maintaining the country’s “C” rating and stable outlook, a rating which reflects that losses for bondholders are likely to exceed 65%. The rating agency commented that the country remains stuck in a deep economic, financial and social crisis which the very weak public institutions appear unable to address. The rating agency added that the depreciation of the local currency and the resulting rise in inflation have caused instability, while commenting that external support hinges on reform implementation. Moody’s expects the economy to buck its contractionary trend in 2024, supported by strong tourism and remittance inflows fueling consumption levels. The rating agency indicated that successive governments have failed to implement the restructuring plan that was announced in April 2020 (shortly after the Eurobond default in March), and that any such restructuring must encompass the government, BDL and the banking sector given the strong interlinkages between these three parties. From another standpoint, it is worth clarifying that a rating by the agency takes into consideration four major elements, namely, economic strength, institutional and governance strength, fiscal strength, and susceptibility to event risk. Lebanon scored “caa2” in economic strength given the steep economic contraction while the “ca” score in institutional and governance strength reflects the country’s weak institutions. With respect to fiscal strength, the former was assessed as “ca”, a fact that portrays the government’s highly leveraged balance sheet that could result in large losses for creditors in the event of default. Lastly, Lebanon scored “ca” in susceptibility to event risk driven by the country’s liquidity risk & external vulnerability risk which can only improve in the case of a comprehensive debt restructuring. The agency also mentioned that the country’s rating is unlikely to change unless fiscal consolidation and structural reform implementation are undertaken at a much faster pace than current levels and over a number of years on the one hand, and a sizeable improvement in the country’s key debt dynamics (such as economic growth, interest rates, privatization revenues, and capacity to register large primary surpluses) on the other so as to guarantee debt sustainability in the future. The rating agency, however, does not foresee any rating upgrade over the near future.