S&P Global Ratings raised Lebanon's long-term local-currency sovereign credit rating to 'CCC+' from 'CCC' on Friday, while leaving the country's long-term foreign-currency rating at 'SD' (selective default).
The upgrade reflects S&P's assessment that the Lebanese government has improved its capacity to service obligations denominated in the local currency. The agency cited three straight years of headline general government fiscal surpluses and steps taken toward reforms required to secure a new program with the International Monetary Fund.
According to S&P, Lebanon recorded an estimated average headline general government surplus of about 2% of GDP across 2023-2025. The agency also noted that the government has remained current on its local-currency commercial debt obligations since 2020.
S&P assigned a stable outlook to the local-currency rating. The agency said the stable outlook balances the momentum on reforms against a range of substantial policy and structural challenges, including weak economic growth, constrained public finances, security risks and major reconstruction needs.
The rating agency highlighted the government's actions on interest arrears to the central bank, Banque du Liban. Payments that were suspended from 2021 through 2023 resumed in 2024 and S&P said the government fully cleared those local-currency interest arrears in 2025.
S&P drew attention to the sharp depreciation of the Lebanese pound, which markedly reduced the share of local-currency debt in the government's total gross debt. The agency stated that local-currency debt fell to less than 1% of GDP at year-end 2025, down from about 85% of GDP in 2020.
The sovereign's foreign-currency rating remains at 'SD' following the government's March 2020 announcement that it would halt payments on its commercial foreign-currency obligations, comprising roughly $31 billion of Eurobonds.
Despite the recent progress on IMF-related reforms, S&P said it does not expect meaningful headway on public debt restructuring within the next year. The agency pointed to slow movement on banking sector reform and the pending implementation of the deposit recovery strategy as reasons for limited expectations on restructuring.
S&P listed specific reform milestones that the government has achieved. The agency noted passage of the Bank Restructuring Law in July 2025 and the Banking Secrecy Law in April 2025. It also said the cabinet approved the Financial Stabilization and Deposits Repayment Act in December 2025, though that act still requires parliamentary approval.
On macroeconomic projections, S&P forecast real GDP growth of roughly 3.0%-3.5% for 2026-2029, following an estimated expansion of 3.5% in 2025 after a contraction of 6.5% in 2024. The agency said the Lebanese pound has stabilized at LB 89,500 per US$1 since February 2024.
S&P expects Lebanon's net general government debt to fall to 91% of GDP at end-2026, down from about 253% at end-2022. The agency attributed the projected decline to exchange rate stability, improved fiscal performance and high inflation over the past six years.
Finally, S&P projected the current account deficit will narrow but remain elevated, averaging about 11% of GDP over the coming years, compared with an average deficit of 16% of GDP over 2023-2025.
Summary
S&P raised Lebanon's long-term local-currency rating to 'CCC+' from 'CCC', citing three years of fiscal surpluses and reform progress tied to IMF conditionality, while keeping the foreign-currency rating at 'SD'. The agency assigned a stable outlook but cautioned that weak growth, fiscal constraints, security risks and reconstruction needs pose ongoing challenges. Key fiscal and policy milestones include resumed payment of local-currency interest arrears to Banque du Liban and enactment of several banking and stabilization laws, with some measures still awaiting parliamentary approval.