Mubasher: Moody's Investors Service highlighted that the negative outlook previously placed for sovereigns in the Levant and North Africa region in 2020 is a result of political and social tensions due to a slowing pace of reform and limited scope for fiscal consolidation.

Sovereign creditworthiness is likely to be constrained by the ongoing sizeable deficits, high debt burdens, and external and liquidity risks in 2021, Moody's vice president - senior analyst, Elisa Parisi-Capone, said in a recent press release.

“Continued weak growth and employment prospects after years of fiscal and economic adjustment are fuelling political and social discontent, particularly in Lebanon and Iraq. Weak global growth will exacerbate subdued domestic demand and reduce the benefits of competitiveness reforms in Morocco, Egypt, Tunisia, and Jordan,” the statement said.

Moreover, the less predictable global environment may reduce investor confidence and result in a shock in borrowing costs, especially, if an outright military conflict arose in the Middle East, which would be particularly credit negative as the region relies on external financing.