Moody's Says GCC Measures Have Limited Impact on Financial Situation

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Moody's said that the latest measures taken by Gulf Cooperation Council states, which urged their nationals to refrain from traveling to Lebanon, will not have a direct impact on the country's financial situation.

The credit rating company said that the proportion of visitors coming from the GCC countries has already fallen since 2011 for security reasons.

Moody's said that the rate of Lebanese citizens and passengers arriving from Saudi Arabia, Kuwait, Qatar, Bahrain and the UAE to Lebanon has fallen to 1.6 percent in 2015 of the total visitors to the country.

The number of visitors from the GCC countries has dropped by 55 percent since 2011.

Moody's pointed out that the escalation in tension between Lebanon and the Gulf states could negatively affect the Lebanese community working there if their residency permits were declined a renewal.

It pointed out that the Lebanese diaspora is a loyal source of deposits for Lebanese banks particularly that the growth in bank deposits allows the financial organization to keep funding the rising state's debt.

Moody's said that a freeze in renewing the residency permits of Lebanese, if it happens, could lead to a slowdown in remittances and the influx of deposits to Lebanon. However it did not expect the governments of the Gulf states to resort to expelling Lebanese employees.

Late in February, the GCC countries issued travel warnings to Lebanon in a sign of escalating tensions between Lebanon and the Gulf.

Riyadh announced a halt to a $4 billion in grants to the Lebanese army and security forces.

The moves came due to what Riyadh said were stances taken by Lebanese officials and "hostile" positions linked to Hizbullah.

Last week the six-member GCC declared Hizbullah a "terrorist" group in the latest step against the organization as ties between its main backer Iran and regional powerhouse Saudi Arabia deteriorate.

SourceNaharnet