Fitch affirms Qatar’s rating at ‘AA-’ with stable outlook

Fitch Ratings has affirmed Qatar’s long-term foreign-currency issuer default rating at ‘AA-’ with a stable outlook.
According to the rating agency, Qatar’s ‘AA-’ ratings are supported by large sovereign net foreign assets, one of the world’s highest ratios of GDP per capita, a flexible public finance structure and a favourable outlook for debt reduction.
The report said that a supportive oil and gas market outlook and strong estimated investment returns on Qatar’s foreign assets have offset the impact of rising contingent liabilities from the banking sector on Qatar’s credit profile.
It said, “We forecast Qatar’s general government budget surplus at about 15 percent of GDP in 2022 including estimated investment income on government external assets. Oil and gas revenue will be sharply higher in 2022, under our assumption that the Brent oil price will average $100 per barrel, offsetting a bump in spending related to Qatar hosting the 2022 Football World Cup.
“Lower capital spending and tight control over current spending beyond 2022 should help maintain budget surpluses, which will be further boosted by an expansion of gas production from 2025. These forecasts imply a break-even Brent oil price of about $50 per barrel.”
Highlighting the falling debt ratio for Qatar, the report said, “We expect debt/GDP ratio to decline to about 67 percent in 2022 compared 81 percent in 2022 on the back of an expansion of nominal GDP due to higher oil and gas prices. The subsequent debt path will depend on how the government chooses to deploy its fiscal surpluses.”
“We expect that a return to fiscal surpluses and an expansion of hydrocarbon production will lead to debt reduction, and large usable public sector assets,” the report said.