Moody’s Investors Service, the international rating agency, published on November 24, 2025 a credit opinion 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 cited a set of credit strengths and challenges underlying Lebanon’s rating, with the former pivoting around the commitment of international donor support conditional upon the implementation of the IMF reform program added the renewed reform momentum under the newly elected President and appointed Government. On the other hand, credit challenges included the propagation of a harsh economic, financial & social crisis, a severely weak institutional & governance strength (thereby impeding reform implementation), and the sizeable human displacement & infrastructure damage resulting from the latest war. In parallel, Moody’s stated that the stable outlook indicates that Lebanon’s rating is likely to remain unchanged over the near future. The agency also mentioned that the country’s rating is unlikely to change unless fiscal consolidation and structural reform implementation are undertaken on the one hand and an improvement in revenue generation capacity and a sizeable amelioration in the country’s key debt dynamics (such as economic growth, interest rates, privatization revenues, and capacity to register large primary surpluses) are achieved on the other hand so as to guarantee debt sustainability in the future.

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 “caa1” in economic strength given the steep economic contraction since 2019. On a positive note, the agency pointed out that remittances and travel-related income from the Lebanese diaspora are aiding in supporting income levels. On the institutional and governance strength front, Lebanon attained a score of “ca”, reflecting a frail governance environment characterized by an anemic fiscal policy effectiveness (which is constrained by the slowdown in economic activity and revenue generation). With respect to fiscal strength, the former was assessed as “ca”, a fact that portrays the Government’s high indebtedness level (debt at 148% of GDP in 2025) 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, added the high exposure of the banking sector to sovereign debt.

According to the report, and after four years of political deadlock following the country’s default in March 2020, the election of a new President and the formation of a new Government in early 2025 have paved the way for carrying out a comprehensive debt restructuring at the level of the public sector, BDL, and commercial banks given their strong inter-relationship. The report added that the Government has enacted key legislations for bank restructuring, namely banking secrecy reform in April 2025 and bank restructuring law in July 2025 (noting that its implementation hinges upon passing the Financial Regularization Law/ Financial Gap Law). In parallel, the report stated that restoring efficient functioning of public institutions is critical following years of economic stalemate (25% GDP contraction in 2020 and an additional 7.5% drop in 2024 due to the regional hostilities that resulted in the displacement of 1.3 million individuals and inflicted some $8.5 billion in losses). Furthermore, Moody’s noted that an international aid conference was held in Paris gathering pledges of some $1 billion in support for Lebanon commenting that said aid is most likely dependent on reforms requested by the IMF. The rating agency is projecting an economic growth of 2.5% in 2025, and 3.5% in each of 2026 and 2027, commenting that these projections can improve in the event of rapid reform implementation.