Mubasher: Credit rating agency Standard & Poor's (S&P) has affirmed Qatar’s long- and short-term sovereign credit ratings at “AA-/A-1+”, changing its outlook to stable instead of negative.
Meanwhile, the transfer and convertibility (T&C) assessment remained unchanged at “AA”, according to the US-based agency’s report.
The stable outlook reflects the agency’s view that Qatar will continue to effectively mitigate the economic and financial fallout of the boycott imposed on the GCC country in June 2017.
Since 5 June 2017, Qatar has been facing outflows of foreign customers' deposits after four Arab countries led by Saudi Arabia cut their diplomatic and trade ties with the gas-rich state, accusing Qatar of financing terrorism. Doha forcefully denies the charges.
“Qatar will continue to pursue prudent macroeconomic policies that support large recurrent fiscal and external surpluses over 2018-2021,” the report said.
Raising the rating of the gas-rich nation will provide greater clarity on the Qatari government's external assets.
“The government has taken measures to ease the economic and financial impact, and we now expect larger budgetary and external surpluses at the end of 2018 than in our last review,” the agency highlighted.
It also expected that Qatar will continue to operate surpluses in external accounts over its 2018-2021 rating horizon, on the back of oil prices above $51 per barrel (pb).
Moreover, the boycott has driven Qatar to open new businesses and diversify its trade routes and relationships in an effort to support its high dependence on imports.
The rating agency projects that Qatar’s net creditor position will grow by an average of 5% of gross domestic product (GDP) per year.
“The budget for major capital expenditure is expected to reach Qatari riyal (QAR) 454 billion (approximately $125 billion), equivalent to 14 % of GDP per year over 2015-2019, with an estimated additional QAR355 billion, or 9% of GDP, annually for 2020-2024,” the report pointed out.
