PARIS - The Lebanese economy and public finances have managed to weather the impact of the recent Israeli-Hezbollah conflict, the ratings agency Standard and Poor's said on Monday.

The agency also removed its long-term rating on Lebanon from its "CreditWatch" list, where it had been placed on July 13 at the start of the fighting.

"The removal of Lebanon from CreditWatch with negative implications reflects the reduced risk of a sovereign downgrade in the immediate future," said Standard and Poor credit analyst Farouk Soussa.

"The Lebanese economy and public finances have withstood the immediate threat posed by the conflict with Israel that left much of Lebanon devastated," he said.

Nonetheless, Standard and Poor's described its outlook on Lebanon as "negative".

The agency estimated that banking outflows during the fighting came to two billion dollars, or 2.7 percent of total deposits. But it added that these losses were partially offset by inflows of 1.5 billion dollars in financial assistance from Saudi Arabia and Kuwait.

But it cautioned that "medium-term challenges for Lebanon remain severe, with much depending on how quickly the economy recovers and on donor support for the rebuilding effort."

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