Lebanon Moody’s Rating Cut to Same Grade as Venezuela

A Lebanese anti-government protester, wrapped in a national flag, stands in front of a road blocked with burning tyres and overtunrned garbage dumpsteres in Beirut. (File photo: Reuters)
A Lebanese anti-government protester, wrapped in a national flag, stands in front of a road blocked with burning tyres and overtunrned garbage dumpsteres in Beirut. (File photo: Reuters)
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Lebanon Moody’s Rating Cut to Same Grade as Venezuela

A Lebanese anti-government protester, wrapped in a national flag, stands in front of a road blocked with burning tyres and overtunrned garbage dumpsteres in Beirut. (File photo: Reuters)
A Lebanese anti-government protester, wrapped in a national flag, stands in front of a road blocked with burning tyres and overtunrned garbage dumpsteres in Beirut. (File photo: Reuters)

Lebanon had its rating cut to the lowest grade by Moody’s Investors Service, which said that bond investors will likely suffer major losses on their holdings as the government struggles to secure aid to ease a crippling financial crisis.

Moody’s lowered Lebanon’s credit score to C from Ca, the same level as crisis-ravaged Venezuela. It reflects Moody’s “assessment that the losses incurred by bondholders through Lebanon’s current default are likely to exceed 65 percent,” the agency said in a statement.

“In the absence of key steps toward plausible economic and fiscal policy reform, official external funding support to accompany a government debt restructuring is not forthcoming.”

Lebanon, which has already defaulted on billions of dollars in debt this year, is struggling to secure an International Monetary Fund (IMF) loan deal amid crisis.

However, Lebanon's Economy Minister Raoul Nehme said in an interview with Bloomberg that the country may only count on the IMF for as little as half the bailout it had originally sought.

With talks over a $10 billion loan program stalling for much of this month, the IMF could provide an amount in a range of $5 billion to $9 billion, Nehme said.

Should negotiations succeed, Lebanon will look to cover the rest of its $30 billion in total needs by seeking help from allies and capitalizing on pledges of about $11 billion made by international donors in 2018 in exchange for a promise of reforms, according to Nehme.

“All of them are waiting for the IMF, in my opinion,” he said.

Without an IMF bailout, Lebanon is looking at a “real black scenario,” and officials are working hard to secure a package as quickly as possible, he stressed.



IMF Says US Tax, Spending Bill Runs Counter to Deficit-Cutting Advice

 Pens lay on a table before House Speaker Mike Johnson, R-La., arrives to sign President Donald Trump's signature bill of tax breaks and spending cuts, Thursday, July 3, 2025, at the Capitol in Washington. (AP)
Pens lay on a table before House Speaker Mike Johnson, R-La., arrives to sign President Donald Trump's signature bill of tax breaks and spending cuts, Thursday, July 3, 2025, at the Capitol in Washington. (AP)
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IMF Says US Tax, Spending Bill Runs Counter to Deficit-Cutting Advice

 Pens lay on a table before House Speaker Mike Johnson, R-La., arrives to sign President Donald Trump's signature bill of tax breaks and spending cuts, Thursday, July 3, 2025, at the Capitol in Washington. (AP)
Pens lay on a table before House Speaker Mike Johnson, R-La., arrives to sign President Donald Trump's signature bill of tax breaks and spending cuts, Thursday, July 3, 2025, at the Capitol in Washington. (AP)

The massive US tax and spending bill slated for a final vote in Congress runs counter to the International Monetary Fund's recommendations that Washington reduce fiscal deficits over the medium term, IMF spokesperson Julie Kozack said on Thursday.

Kozack told a regular news briefing that there was a broad consensus that the Republican bill will add to US fiscal deficits, while the US needs to start a fiscal consolidation.

"From the IMF side, we have been consistent in saying that the US will need to reduce its fiscal deficit over time to put public debt-to-GDP on a decisive downward path," Kozack said. "Of course, the sooner that process starts to reduce the deficit, the more gradual the deficit reduction can be over time."

Kozack said that there were many policy options for the US to reduce deficits and debt, adding: "It is, of course, important to build consensus within the United States about how it will address its these chronic fiscal deficits."

In recent years, the IMF has recommended that the US raise taxes, including on middle income earners, to close fiscal deficits. The Republican tax bill extends 2017 tax cuts and adds new tax breaks for many Americans.

The IMF advice is at odds with the views of US Treasury Secretary Scott Bessent, who has consistently said that he disagrees with traditional budget forecasts and believes that the so-called "One Big Beautiful Bill Act" will spur additional US economic growth that will boost revenues.

The United States is the biggest shareholder of the IMF. Bessent, who manages the US stake, has criticized the Fund for straying too far from its core economic stability and surveillance missions.

Kozack said that the IMF was examining details of the US legislation and the likely impact on the economy, and will incorporate its analysis into the late July update of its World Economic Outlook global growth forecasts.

The forecasts also will assess the state of play on US tariffs, after President Donald Trump's July 9 deadline to subject many countries to sharply higher duties unless they agree trade deals.