S&P Global Ratings on Monday said it has affirmed its “AA-/A-1+” long- and short-term foreign and local currency ratings on Qatar, citing that the outlook is stable for the country. 

The ratings agency said it considered that the rapid growth of foreign debt in the Qatari banking system could present balance-of-payment risks if the capital inflows were to reverse sharply, but that it was not the agency’s base-case scenario. 

“In our view, Qatar’s status as one of the largest exporters of liquefied natural gas in the world and our estimate of its substantial fiscal and external buffers mitigate the risks,” the agency said in a research update. 

S&P said it could consider raising the ratings if Qatar’s external and fiscal net asset positions proved stronger than forecast, while the banking system’s elevated stock of short-term external debt moderated in an orderly way.

The rating could be lowered if Qatar experienced a significant external shock, either due to a material worsening of its terms of trade, or to a sizable outflow of nonresident deposit funding from its banking system, where financial assets amount to an estimated 270 percent of gross domestic product (GDP). 

“We could also lower the ratings if the Qatari government’s balance sheet were to weaken substantially, reducing our estimate of government liquid assets to below 100 percent of GDP,” the agency said. 

For its rationale, S&P said Qatar remains one of the largest exporters of liquid natural gas globally, with the government planning to increase production by about 64 percent to 126 million tonnes annually between 2025 and 2027, equivalent to around 3.1 million barrels of oil per day. 

Qatar’s macroeconomic indicators should then strengthen, the agency said, but growth assumptions for the near future factor in broadly stable gas production and a moderate expansion in manufacturing sector output, including heavy downstream activities.

“Even so, Qatar's income levels remain high, and we forecast that GDP per capita will rebound to an average of $68,000 in 2021-2024 from a low of $54,000 in 2020,” S&P concluded. 

(Writing by Imogen Lillywhite; editing by Brinda Darasha) 


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