Qatar’s public debt pressure is set to ease with expected fiscal surplus in 2021 in view of the recovery of the global economy and stronger oil and gas prices, the Economist Intelligence Unit (EIU) said in its latest update.
Qatar will remain comfortably able to fully service its debt obligations, supported by a strong commitment to do so, ample foreign reserves and the assets of the Qatar Investment Authority (QIA), the sovereign wealth fund, EIU noted.
The end of the blockade in January has significantly reduced economic risk stemming from regional disputes, EIU said.
According to EIU, the Qatari riyal's peg to the dollar will continue to be backed by healthy foreign reserves and QIA assets. The rating is supported by a recovery in international oil prices and an expected shift from deficit to surplus on the current account in 2021.
Qatar’s banking sector, EIU said, is “well regulated”, and although net external liabilities pose risks, strong prudential indicators insulate banks from a deterioration in asset quality. The non-performing loan ratio is low, and profitability levels are moderate."
However, EIU noted Qatar's “dependence” on hydrocarbons exports leaves it exposed to global price movements. In the short term, policy will continue to focus on addressing the fallout from the pandemic. Qatar's large stock of public debt weighs on the outlook, but a sound financial system is supportive.
In an earlier update, EIU said Qatar's “fairly open” foreign investment regime, “open” trading relationships with regional partners and “sophisticated” capital markets will remain strong aspects of its business environment.
Qatar's overall business environment score has improved from 6.56 for the historical period (2016-20) to 7.35 for the forecast period (2021-25), the EIU noted.
“This has helped Qatar's global ranking to improve by eight places from 36th to 28th, although its regional ranking remains steady at third. The largest improvements, in terms of scores, are in the categories of infrastructure and market opportunities,” EIU said.