Standard & Poor’s (S&P) has affirmed Qatar’s long-term rating at AA and short-term rating at A-1+ but revised its outlook to negative because of evidence of growing external indebtedness in a report issued on 3 March.
“The negative outlook reflects the risk that Qatar’s external position could deteriorate further should the rapid growth in external debt continue to outpace external liquid asset growth, thereby reducing the buffer provided by its sizeable external assets,” S&P said. “Qatar’s external liquidity position has weakened with the rapid growth of banks’ foreign liabilities and public sector debt, which has pushed up the country’s external financing needs.”
S&P said Qatari banks’ external liabilities rose 24 percentage points of GDP in 2016. Nonresident deposits with Qatari banks increased 17 percentage points of GDP. Public sector external debt grew by 14 percentage points of GDP over 2016.
S&P said in the report that it forecasts Qatar’s GDP in dollar terms at current prices will grow by almost 8 per cent in 2017 to $168bn and hit $200bn in 2020.The current account deficit this year will fall to 2.1 per cent of GDP from 4.1 per cent in 2016. S&P forecasts the deficit will fall again in 2018 and a surplus will be recorded in 2019 and 2020. The positive trends mainly reflect the impact of forecast higher oil prices.
The budget deficit is forecast to fall to 2.6 per cent of GDP in 2017. The government is forecast to start recording surpluses from 2019.
Consumer price inflation this year is forecast at 3.6 per cent compared with 3.4 per cent in 2016.