Lebanon saw its global country risk ranking drop by two notches, reinforcing its low position among the Middle East and North African (MENA) countries, according to Euromoney magazine’s twice-yearly survey. Ranked 109th globally, down from 107th in September 2004 – behind Cape Verde and Ecuador – Lebanon ranked 14th out of 19 MENA countries, scoring 36 points, well below the regional 49.14 average.
The country’s overall score regressed by 7% from the previous survey and declined by 3% on a year-on-year average.
The survey evaluates individual country risk by assigning a weighting to nine categories ranging from political risk to economic performance, debt indicators and access to bank finance. Lebanon maintained a perfect score on debt default and rescheduling, reflecting the country’s clean record in honoring its debt obligations, and also scored high on political risk and debt indicators. Lebanon scored lowest in credit ratings, access to bank finance and discount on forfeiting.
However the survey was conducted before the February 14th assassination of former premier Rafik Hariri. Since then, analysts say investors have tended to adopt a wait-and-see attitude, with no significant capital flight from the country having been registered since February.
Lebanese economist, Kamal Hamdan, maintains a positive outlook on the situation if the government meets its economic and fiscal obligations.
“Should this happen, we will be in good shape, because we are still benefiting from the effects of Paris II as well as this ‘beatific optimism’ as we characterize the behavior of investors here. It’s an optimism that goes contrary to rational economic behavior and leads investors to keep their capital and investments in Lebanon, despite the risk involved. This behavior has saved the economy from crashing time and again since 2001, and it looks as though it continues to do so.”
