S&P Global Ratings has raised Lebanon’s long-term local-currency sovereign credit rating to “CCC+” from “CCC,” assigning a stable outlook, the agency said Friday, citing improved fiscal performance and gradual progress on financial-sector reforms.

At the same time, S&P affirmed Lebanon’s short-term local-currency rating at “C” and maintained its long- and short-term foreign-currency ratings at “SD/SD” (selective default), reflecting the government’s continued failure to restructure external debt following its March 2020 suspension of payments on roughly $31 billion in Eurobonds.

The upgrade marks the second consecutive improvement in Lebanon’s local-currency rating, after it was raised from “CC” to “CCC” last year. S&P said the latest move reflects the government’s improving ability to service domestic debt obligations, supported by three consecutive years of fiscal surpluses.

Authorities have continued to meet local-currency debt commitments and, in 2025, fully cleared outstanding interest arrears owed to Banque du Liban, the central bank. The agency said Lebanon has begun key banking-sector and fiscal reforms required to advance toward a potential funded program with the International Monetary Fund (IMF).

S&P noted structural shifts in public finances in recent years. The sharp depreciation of the Lebanese pound has significantly reduced the real burden of local-currency debt, while tighter fiscal management has helped narrow deficits and strengthen domestic debt-servicing capacity.

However, the agency cautioned that progress on broader structural reforms remains modest and could be constrained by Lebanon’s complex political landscape, particularly ahead of parliamentary elections scheduled for May 2026. Amendments and measures required to secure a comprehensive IMF program and broader fiscal restructuring have yet to be fully implemented.

Despite improvements on the domestic front, S&P does not expect meaningful progress on restructuring Lebanon’s foreign-currency obligations in the near term. The foreign-currency rating remains in selective default, as a comprehensive external debt restructuring has not been completed since the 2020 default.

The stable outlook on the local-currency rating reflects what S&P described as a balance between gradual fiscal improvement and persistent economic, political and financial risks. While recurring budget surpluses and initial reform steps signal tentative stabilization, the broader recovery remains fragile amid weak growth, constrained public finances, security risks and substantial reconstruction needs.