International credit rating agency Capital Intelligence (CI) has affirmed the long-term foreign and local currency rating (LT FCR and LT LCR) of Qatar at ‘AA’.

The sovereign’s short-term (ST) FCR and ST LCR have also been affirmed at ‘A1+’. The outlook for the ratings remains "stable."

The ratings reflect Qatar’s very strong external balances and budgetary performance, supported by still favourable liquefied natural gas (LNG) prices.

The ratings also take into account the country’s capacity to absorb external or financial shocks given the large portfolio of foreign assets held by the Qatar Investment Authority (QIA) and consequent comfortable net external creditor position when including these assets.

The ratings continue to be supported by substantial hydrocarbon reserves, expanding LNG production and export capacity, and very high GDP (gross domestic product) per capita, as well as high and increasing official foreign reserves.

Highlighting that the public finances remain strong; CI said the government budget recorded a surplus of 0.6% of GDP in the first half (H1) 2024, but is expected to have posted a larger overall surplus of 2.9% for the full year (down from 5.6% in 2023).

Moving forward, the budget surplus is expected to average 3% of GDP in 2025-26, supported by an expected increase in LNG or liquefied natural gas production capacity from the North Field and, consequently, a lower fiscal breakeven hydrocarbon price.

While the reliance on hydrocarbon revenues remains a rating constraint, the government has ample leeway to respond to severe fluctuations in hydrocarbon prices given the size of fiscal buffers and the degree of expenditure flexibility.

The sovereign’s financial buffers remain large, and are considered a major supporting factor for the ratings.

Very large current account surpluses have contributed to a very strong net external creditor position, when the external assets of QIA are included, it said, adding QIA’s total assets are estimated at around 230% of GDP in 2024.

The government deposits increased to 15.3% of GDP in November 2024, while total government and government institution deposits in the domestic banking system were around 45.8% of GDP.

Finding that economic activity remains positive, supported by the resilience of the non-hydrocarbon sectors; the report said real GDP is slated to have increased by 1.3% in 2024 against 1.2% in 2023.

"The short- to medium-term growth outlook remains relatively favourable", with real GDP expected to grow by an average of 3.8% in 2025-26, supported by infrastructure investment and higher expected production from Qatar’s largest gas field, as well as robust performance in the service sector, CI said.

Nevertheless, risks to the growth outlook remain relatively large due to geopolitical risk factors following the war in Gaza, as well as tepid growth in major global economies, especially China, Qatar’s main LNG importer. Other risks include a faster than projected decline in the global reliance on hydrocarbons as a source of energy.

At present, Qatar’s ratings continue to be underpinned by sizeable hydrocarbon reserves (around 12.9% of global gas reserves) and associated export capacity, which in turn provide the government with substantial financial means.

Given the large hydrocarbon exports and rather small population, GDP per capita is expected to exceed $72,000 this year (higher than similarly rated peers)," CI said.