Nahhas Warns Economy Can't Bear Further Political Deterioration

Caretaker Economy Minister Nicolas Nahhas warned on Thursday that the political crisis in the country will have an impact on the economy if it worsened and the country entered vacuum in state posts.

“The red line is the hypothesis that the division would increase among the Lebanese,” Nahhas said in comments to Voice of Lebanon radio (93.3).

He called on officials to assume their duties to resolve the political crisis and “allow President Michel Suleiman to find the appropriate solutions without setting any conditions.”

Nahhas expressed hope that constitutional deadlines would be respected to “prevent any repercussions on the country's economy.”

He stressed that “change could only happen through diplomatic channels.”

However, the caretaker Minister expressed relief that the economic "indicators show the possibility of rebound, where overall growth amounted to 2 percent.”

Last week, Fitch, the rating agency, downgraded Lebanon's long-term foreign and local currency issuer default rating (IDRs) to negative, citing political uncertainties, spill-overs from the Syrian conflict on economic performance and slow growth prospects.

Ratings agency Standard and Poor's lowered in November of the ratings on Lebanon to 'B-' over the “deteriorating fundamentals and rising political risks, adding that the outlook remains negative.”

S&P also lowered to 'B-' from 'B' its long-term counterparty credit ratings on three Lebanese banks, Bank Audi SAL–Audi Saradar Group, BankMed s.a.l., and Blom Bank sal.

The outlooks on all three banks remain negative, the agency said.