Standard Chartered Bank (SCB) considered that Lebanon is slowly moving towards economic stabilization, as favorable political developments, the recent re-engagement of the International Monetary Fund (IMF), and a stabilizing economy, including the approval of the 2025 budget and the enacting of amendments to the banking secrecy law, constitute positive steps. However, it noted that the resumption of airstrikes on Lebanon may distract from the government's efforts towards building an economic recovery plan.  Further, it indicated that a more active engagement with the IMF would be positive in the medium- term, but expected the bilateral discussions to accelerate only after the implementation of tangible fiscal and banking sector reforms. Also, it expressed cautious optimism, given that the burden-sharing formula on the distribution of financial losses among Banque du Liban, depositors and the financial sector is still to be worked out. In addition, it considered that continued discussions with the IMF and regional partners to attract bilateral and multilateral aid would be positive, in addition to tangible progress towards a domestic economic recovery plan and to fiscal tightening in the upcoming budget for 2026.  In parallel, SCB maintained its ''Market Weight'' recommendation on Lebanon's Eurobonds, along with Dubai, Egypt, Kuwait, Morocco, Oman, Qatar, Saudi Arabia, the UAE, and Türkiye in the Middle East and North Africa region. Last January, it changed its recommendation on Lebanon's Eurobonds from ''Under Weight'' to ''Market Weight'', given that risks have become more balanced than before. It attributed its decision to the resolution of the presidential deadlock after a 26-months stalemate and to the designation of a Prime Minister, which should support investor sentiment. It considered that the market expects the government's formation to accelerate development aid, trigger Lebanon's re-engagement with the IMF, and allow creditors to start the public debt's restructuring process. But it anticipated the restructuring of the Eurobonds to be protracted and to face delays in the next one to two years, while it noted that investors do not have details yet on the burden-sharing of financial losses. (ICE BEIRUT)

Fonte notizia: Byblos Bank, May 5-10, 2025