American rating agency Standard & Poor’s (S&P) raised the long-term foreign currency issuer credit and senior unsecured debt ratings on the State of Qatar last month to A- from BBB+ and its long-term credit rating to A from A-. S&P also raised its short-term foreign and local currency issuer ratings to A1 from A2 and maintained the outlook as positive.
The upgrade primarily reflects the recent reductions in the government's debt and debt-service burdens, and Standard & Poor's expectations that these are now on a downward trend. S&P also raised its long-term foreign currency issuer credit rating on Qatar Petroleum (QP) to single-'A'-minus from triple-'B'-plus, in line with that on the sovereign, its sole shareholder.
"The improvements in the government's debt and debt-service burdens have been driven mainly by increases in export receipts from liquefied natural gas (LNG), which should pick up further over the next few years," said Director for Sovereign Ratings in the Middle East and Africa, Ala'a Al-Yousuf. "The debt of the general government has declined in recent years and, according to Standard & Poor's estimates, was 60 percent of Gross Domestic product (GDP) at the end of fiscal year 2001/2002 and should decline to 55 percent of GDP at the end of the current fiscal year, 2002/2003, which began on April 1," he added.
The government has substantial financial assets, including undisclosed foreign investments; however, taking into account its domestic bank deposits alone would reduce its debt burden to about 32 percent of GDP in fiscal 2001/2002 and a projected 27 percenr in 2002/2003, and lower thereafter. Reflecting this, the government's gross interest payments in relation to its revenues have declined to less than 12 percent in 2001/2002 from 15.5 percent in fiscal 1999/2000 and are expected to decline further to 7.5 percent in the current fiscal year.
The ratings on Qatar are supported by prudent fiscal policy, substantial external liquidity, and a small and wealthy population. The ratings are constrained by relatively high, albeit declining, public sector external debt, and emerging political and economic institutions. The ratings could be raised again if the government increases its revenues from LNG exports; reduces its debt burden; enhances the transparency of its finances; and strengthens the country's political system and institutions. — (menareport.com)
© 2002 Mena Report (www.menareport.com)
