Qatar’s external debt is estimated at 88.5% of GDP (gross domestic product) in 2015 but well within the repaying capacity, according to global credit rating agency Capital intelligence (CI) .
The country’s external debt is also at an estimated 146.9% of current account receipts (CARs) in 2015, Cyprus-based CI said, adding the external debt continued to account for slightly less than 40% of total debt.
Although Qatar’s external debt is high in comparison with most other Gulf Cooperation Council (GCC) countries, CI said “however, it is deemed to be within the repayment capacity of the economy in view of the substantial external assets of the government and the private sector”.
Government debt accounts for less than 11% of total external debt and includes outstanding sovereign bond and sukuk issues, with maturities ranging from 5 to 30 years and the enlarged public sector (including government related enterprises (GREs) is estimated to owe around 50% of the country’s external debt.
The external current account position is expected to have posted a deficit of around 5% of GDP in 2015, and is likely to remain in deficit over the medium-term, it said, adding the Qatari government remains a “comfortable” net external creditor however, and sizeable foreign assets provide the country with the capacity to absorb mild external shocks and mitigate concentration risks arising from the dependence on hydrocarbons.
Finding that the general government is a net creditor and its debt service burden is “moderate,” CI said the government issues debt in order to develop its domestic market and benefit from its economic strength in obtaining cheap credit to finance investment projects in international markets.
As a proportion of GDP, the central government’s debt is expected to be around 27.8% in FYE (fiscal year end) 2016, compared to 29.9% of GDP in FYE 2015. Interest expense is quite limited at 4.4% of revenues, it said.
“Nonetheless, the government is expected to increase its borrowing in the medium-term in order to finance its large infrastructural needs and to bridge its fiscal gap, as the steep decline in hydrocarbon prices has adversely affected revenues,” CI said.
Public sector deposits with domestic banks declined slightly as at November 2015 (over 35% are denominated in foreign currencies), implying that net government debt was around 18% of GDP in FYE 2015, excluding the government’s external assets that are managed by the Qatar Investment Authority.
Assessing the government’s contingent liabilities stemming from GREs as “moderate” in the intermediate term, in view of the profitability of these companies; CI said combined with the favourable economic conditions, GRE debt is estimated to be at about 35% of GDP, of which 13% is officially guaranteed.
However, in case of prolonged periods of financial stress, sizeable contingent liabilities could migrate to the government’s balance sheet from various GREs, especially if cross-border refinancing risks rise for the Qatari Diar, which issued around $7bn foreign currency debt via a special purpose vehicle, Qatari Diar Finance; Qatar Airways, Ooredoo; and the partly state-owned gas transport company, Nakilat Inc.


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