Mubasher: Lebanon's credit B3 rating with a stable outlook reflects challenges stemming from its very large public debt burden, which is among the largest in the world, according to annual credit analysis report by Moody's Investors Service Research.

“Lebanon's interest-to-revenue ratio of 42.9% is the highest of all sovereigns we rate," according to Moody's vice president and co-author of the report.

"Combined with an average term to maturity of about five years, this underscores the sovereign's very high sensitivity to further interest rate rises.

“Lebanon's public finance metrics are characterized by a very high debt burden and large fiscal deficits, which are a key credit challenge,” the report indicated.

The very high debt-to-GDP ratio of 142.1% continues to increase despite previous expectations of consistent primary surpluses in response to the interest growth differential.

The ratings agenct forecasts Lebanese economy will expand by 2.5% in 2018 and 3% in 2019.

Meanwhile, the stable outlook takes into account Lebanon's significant foreign exchange buffers, which have proven resilient to political turmoil in recent years.

Moody’s also expects inflationary pressures to persist at current levels in 2018, after reaching 5.1% in 2017.