Fitch affirms Qatar’s credit rating of “AA-” with a stable outlook

Today, the Fitch Ratings Agency affirmed Qatar’s rating at “AA-” with a stable outlook, saying that this rating reflects the strong position of net foreign sovereign assets, noting that Qatar is one of the countries with the highest rates of the output The world’s gross domestic product per capita also has a flexible public financial architecture that allows favorable debt dynamics and a strong response to reduce the financial implications of the Corona pandemic.
The report pointed out that the bulk of Qatar’s gas exports are sold under long-term contracts, and about half of the hydrocarbon revenues received by the state in 2020 are linked to 2019, which limits the decline in hydrocarbon revenues to 27 percent in 2020, and leads to a 9 percent drop in 2021.
The agency expected the non-hydrocarbon sector to shrink by 5 percent in 2020 (with a GDP contraction of 3.8 percent), due to severe restrictions and widespread closings to deal with the spread of the Coronavirus in the second and third quarters of this year, after growth of 1.3 non-hydrocarbon sector achieved in 2019.
The report added that the Qatari government and Qatar Central Bank implemented an economic stimulus package worth 75 billion riyals (equivalent to more than 10 percent of GDP), mainly involving liquidity pumping by the Qatar Central Bank, and investments In the stock market through government funds, supporting companies through loans and guarantees by Qatar Development Bank, and postponing and suspending fees and taxes by the government.
Credit rating agency Fitch expects Qatar’s government debt to drop to 59 percent by 2021, from 68 percent of GDP ($ 126 billion) in 2019, including treasury bills.
The report noted that Qatar recently indicated that it intends to pay off debts of 20 billion US dollars by 2021, including more than 10 billion dollars in 2020, in addition to the scheduled benefits .. pointing out that this will be funded through the reserves of the Ministry of Finance That has been built through 34 billion dollar euro bond issues over the past three years.
The agency also stated that the strong position of government public assets mitigates some of the risks arising from potential liabilities … estimated that net foreign sovereign assets rose to 130 percent of GDP in 2019, from 105 percent of GDP in 2018, which reflects to Significantly the estimated assets of the Qatar Investment Authority, which were supported by strong asset market returns.
The report expected that the Qatari government will be able to provide large liquidity of these assets if needed. Noting that the reserves of Qatar Central Bank also increased to nearly $ 40 billion in 2019, from more than $ 30 billion in 2018.
The report touched Also to expand the production of liquefied natural gas, saying that this could achieve significant improvements in public finance in Qatar in the long run.
He pointed out that Qatar Petroleum intends to add 49 million tons annually (1.9 million barrels of oil equivalent per day) from LNG production from the North Field by 2027, an increase of 64 percent over the current production capacity of 77 million tons.
He added that the additional LNG production could eventually result in more than $ 20 billion in additional hydrocarbon revenues for the government … noting that Qatar Petroleum is moving forward with engineering and design work related to expansion and has got options to build 100 LNG carriers at a value 20 billion dollars.