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S&P Upgrades Lebanon’s Local Credit Rating, Keeps Foreign Debt in Default

A man counts Lebanese pounds at an exchange shop in Beirut, Lebanon, August 20, 2018 (File – AP)
A man counts Lebanese pounds at an exchange shop in Beirut, Lebanon, August 20, 2018 (File – AP)
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S&P Upgrades Lebanon’s Local Credit Rating, Keeps Foreign Debt in Default

A man counts Lebanese pounds at an exchange shop in Beirut, Lebanon, August 20, 2018 (File – AP)
A man counts Lebanese pounds at an exchange shop in Beirut, Lebanon, August 20, 2018 (File – AP)

Standard & Poor’s (S&P) has raised Lebanon’s long-term local currency credit rating to CCC from CC, maintaining a “stable” outlook. However, the agency left the country’s foreign currency rating at Selective Default (SD), underscoring Beirut’s ongoing failure to honor certain obligations.

The upgrade reflects what S&P described as Lebanon’s improved capacity to service domestic commercial debt, supported by fiscal surpluses over the past two years and initial progress on reforms tied to a prospective IMF program. The “selective default” designation refers to a situation where an entity defaults on specific commitments while continuing to meet others.

Lebanon remains among the world’s weakest credit risks. Fitch downgraded the country to Restricted Default (RD) in mid-2024 for both local and foreign currencies before withdrawing its ratings altogether, citing lack of essential financial data. Moody’s still places Lebanon at C, its lowest rating.

Lebanon’s local-currency debt has shrunk dramatically, falling to around 2 percent of GDP - less than $1 billion - by the end of 2024, down from roughly 100 percent before the financial collapse in 2020. This was largely the result of a 98 percent collapse in the Lebanese pound’s value between 2019 and 2024.

Despite the turmoil, the government has maintained payments on local commercial obligations. It resumed interest payments to the central bank in 2024 after a three-year halt and has pledged to start repaying arrears this year.

The government formed in early 2025 under President Joseph Aoun and Prime Minister Nawaf Salam has pushed through several reforms, including a revised banking secrecy law and a bank restructuring bill. However, the crucial “financial gap” law - needed to apportion past losses and protect depositors - remains stalled.

The IMF, following a recent mission to Beirut, stressed that passing this law and approving the 2026 budget are essential. The fund has urged Lebanon to adopt a revenue-boosting and spending-rationalization strategy before further support can be unlocked.

S&P cautioned that major debt restructuring is unlikely before the May 2026 parliamentary elections, five years after Lebanon defaulted on its Eurobonds. The ongoing conflict between Israel and Hezbollah, despite a November 2024 ceasefire, continues to darken economic prospects.

Lebanon’s economy contracted by 6.5 percent in 2024, following smaller declines in 2022 and 2023. In dollar terms, GDP has halved from $55 billion in 2018 to $28 billion last year. S&P projects modest average growth of 2.3 percent in 2025–2026.

Since February 2024, the pound has stabilized around 89,500 to the dollar. Government net debt is expected to fall to 113 percent of GDP by end-2025, down from about 240 percent in 2022, thanks to fiscal gains, currency stability, and inflation-driven nominal growth.

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Mexico, EU Sign Stalled Trade Deal as they Aim to Diversify from US

22 May 2026, Mexico, Mexico City: EU Council President Antonio Costa, Mexico's President Claudia Sheinbaum and EU Comission President Ursula von der Leyen are pictured holding the trade agreement at the presidential palace. Photo: Felix Marquez/dpa
22 May 2026, Mexico, Mexico City: EU Council President Antonio Costa, Mexico's President Claudia Sheinbaum and EU Comission President Ursula von der Leyen are pictured holding the trade agreement at the presidential palace. Photo: Felix Marquez/dpa
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Mexico, EU Sign Stalled Trade Deal as they Aim to Diversify from US

22 May 2026, Mexico, Mexico City: EU Council President Antonio Costa, Mexico's President Claudia Sheinbaum and EU Comission President Ursula von der Leyen are pictured holding the trade agreement at the presidential palace. Photo: Felix Marquez/dpa
22 May 2026, Mexico, Mexico City: EU Council President Antonio Costa, Mexico's President Claudia Sheinbaum and EU Comission President Ursula von der Leyen are pictured holding the trade agreement at the presidential palace. Photo: Felix Marquez/dpa

Mexico and the European Union signed a long-stalled free trade agreement on Friday as they seek to decrease dependence on the US and partially insulate themselves from US President Donald Trump's tariffs.

The accord, which they reached broad agreement on in 2025 but have delayed signing, expands a Mexico-EU trade accord from 2000, which covered only industrial goods. The new pact adds services, government procurement, digital trade, investment and farm produce.

Mexico's President Claudia Sheinbaum, European Commission President Ursula von der Leyen and European Council President Antonio Costa signed the deal in Mexico City in their first summit in ⁠over a decade.

"This ⁠agreement is a true geopolitical statement," Costa said on Friday, shortly after signing the agreement. "With the modernized global agreement, we are better prepared to face the challenges of our time."

"This agreement opens up enormous opportunities for both regions, allowing for expanded trade," Sheinbaum said, highlighting the pharmaceutical industry, agriculture, technological development and electric mobility.

Both sides want to diversify their exports away from the US.

The EU was hit with sweeping new duties in Trump’s “Liberation Day” tariffs in April 2025 and ⁠prepared countermeasures, though these were paused as both sides sought talks. While tensions eased somewhat with a tariff truce and a July deal, US tariffs on EU exports remain elevated.

Mexico has also been hit with stiff US tariffs on automotive, steel and aluminum exports, and trade relations between the two countries have been volatile throughout Trump's second term.

According to Reuters, Mexico's economy ministry estimates the new agreement could increase Mexican exports to the EU from around $24 billion a year to $36 billion by 2030. The EU exports around $65 billion in goods annually to Mexico.

Trade between Mexico and the EU has increased 75% in a decade, dominated by transport equipment, machinery, chemicals, fuels and mining products.

The new deal provides duty-free access for almost all goods including farm products such ⁠as Mexican chicken and ⁠asparagus and European milk powder, cheese and pork, albeit with some quotas.

While the updated trade deal has been ready, it has taken over a year to sign.

The EU prioritized a free-trade agreement with the South American bloc Mercosur and it concluded free-trade negotiations with Indonesia, India and Australia in the past eight months.

Mexico, meanwhile, has been cautious about taking steps that could anger the Trump administration during sensitive negotiations to extend the US-Mexico-Canada trade pact. More than 80% of Mexico's exports currently go to the US.

In the EU, the trade deal will be voted on by the European Parliament, which is likely to approve it within a few months.

"The goal here is very simple: we want to create more jobs and more value on both sides of the Atlantic," von der Leyen said. "This agreement gives us great wings to fly very high."

Business

Moody's Affirms its Credit Rating of Saudi Arabia at 'Aa3' with Stable Outlook

The Saudi flag. Asharq Al-Awsat
The Saudi flag. Asharq Al-Awsat
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Moody's Affirms its Credit Rating of Saudi Arabia at 'Aa3' with Stable Outlook

The Saudi flag. Asharq Al-Awsat
The Saudi flag. Asharq Al-Awsat

The credit rating agency Moody’s has affirmed Saudi Arabia’s credit rating at “Aa3” with a “stable” outlook.

The agency said Friday that the affirmation at Aa3 reflects Saudi Arabia’s large and wealthy economy, supported by its vast hydrocarbon endowment, and highly competitive position in global energy markets, alongside improving institutional and policy effectiveness.

Progress under Vision 2030 has underpinned solid non-hydrocarbon growth, supported by sustained public investment, structural reforms, and gradually improving fiscal and economic transparency.

Moody’s noted that Saudi Arabia’s stable outlook reflects the Kingdom’s resilience against regional geopolitical risks and potential trade disruptions, supported by strong and continued oil exports flexibility through the East-West pipeline and Red Sea terminals.

The agency also expects that the Kingdom’s progress on economic diversification is likely to continue and the momentum will be sustained over the coming years. It is supported by significant progress to date in implementing a broad-based reform agenda, including judicial, business and social reforms that have accelerated the development of the services sector and the broader non-oil economy.

Moody's expects non-hydrocarbon private sector GDP growth to return to around 4-5% after the Middle East conflict subsides, among the strongest rates in the Gulf Cooperation Council (GCC), reflecting ongoing structural reforms, sustained public investment and improving private sector participation.

Business

Morocco Farmers Saw Hope in Rain, but Mideast War Inflates Production Costs

A farmer works in his wheat field in the Sebt Meghchouch region of Morocco, on April 28, 2026. (Photo by Abdel Majid BZIOUAT / AFP)
A farmer works in his wheat field in the Sebt Meghchouch region of Morocco, on April 28, 2026. (Photo by Abdel Majid BZIOUAT / AFP)
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Morocco Farmers Saw Hope in Rain, but Mideast War Inflates Production Costs

A farmer works in his wheat field in the Sebt Meghchouch region of Morocco, on April 28, 2026. (Photo by Abdel Majid BZIOUAT / AFP)
A farmer works in his wheat field in the Sebt Meghchouch region of Morocco, on April 28, 2026. (Photo by Abdel Majid BZIOUAT / AFP)

Like many Moroccan farmers, Mehdi el-Maazi was hopeful that rare heavy rains would yield an abundant harvest this year -- but those hopes were quickly shattered as the Middle East war sent fuel and fertilizer costs soaring.

Morocco, where agriculture employs about a quarter of the working population and where drought had persisted for seven consecutive years, recorded massive rainfalls last February and December.

Across the rural region of Marchouch, about 70 kilometres (43 miles) south of Rabat, landscapes that had long been parched have turned green again, and farmers have taken back to working their fields.

Following the rains this winter, the country expected a strong cereal harvest, with output estimated to reach nearly nine million tonnes -- more than double last year's. Overall agricultural output was also set to rise by about 15 percent from last season.

But the war in the Middle East, which began in late February, has disrupted maritime traffic through the Strait of Hormuz, not only sending global energy markets into a tailspin but also choking fertilizer supplies.

Prior to the war, Maazi would normally spend around 1,200 dirhams ($130) per hectare on diesel to run his tractor. Now, he said, the cost has climbed to 1,800 dirhams.

"We were happy at first about the arrival of the rain," said the 32-year-old lentil farmer. "But with the increase in diesel prices, everything changed."

Farmers also say higher fuel prices are driving up the cost of nearly everything needed to produce crops.

Abdelkader Toukati, another farmer in the area, said he hoped "the price of diesel will fall before the beginning of the harvest season".

High prices have meant that workers' wages have also risen and even "the cost of renting harvesting machines doubled", Toukati added.

Abdelaziz Drissi, who rents out agricultural machinery, also complained that there was little to no financial reward.

"There is no longer any profit," he said. "We are only working to pay for fuel."

Rising energy costs have had a direct impact on key farming supplies, driving up prices for seeds, fertilizers, pesticides and animal feed.

Livestock breeder Abdessadaq el-Fayd said grain feed prices had sharply risen in recent months.

"We used to buy it for 90 dirhams" per sack, he said. "Today, it costs 110 to 120 dirhams."

A recent report by the kingdom's High Commission for Planning projected economic growth of five percent in the first quarter of 2026, up from 4.1 percent in the previous quarter, driven in part by agricultural activity.

In an effort to alleviate rising costs, the Moroccan government in March announced aid for transport operators.

And last month, Prime Minister Aziz Akhannouch pledged to "improve distribution chains so that prices remain at a reasonable level".

But farmers interviewed by AFP said the measures have yet to rein in prices.

Rachid Benali, president of the Moroccan Confederation of Agriculture and Rural Development, said the price hikes "mainly concern fuels and nitrogen fertilizers".

But while the high costs "will have no impact on either volume or quality" of harvests, they "will automatically be reflected" in produce prices at markets, he added.