DOHA: Qatar’s per capita income was a staggering $97,000 in 2012, making it one of the richest nations in the world, global ratings agency Standard & Poor’s said yesterday, describing the outlook for the country as stable.
The agency affirmed its long- and short-term foreign and local currency ratings on Qatar as ‘AA/A-1+’, reiterating the stable outlook.
Economic growth slowed down in 2012 and is expected to contract by 0.5 percent on average between 2013 and 2016 as the large investment programme to boost liquefied natural gas production capacity to about 77 million tonnes a year tails off, the agency said in a statement yesterday.
“The stable outlook balances our view of Qatar’s high economic wealth and strong fiscal position against its institutional shortcomings, limited monetary flexibility, and its banks’ likely increasing dependence on external financing,” read the statement.
The ratings affirmation and stable outlook apply to other ratings that the agency views as equivalent to the sovereign credit rating on Qatar, including the ‘AA’ long-term senior unsecured debt rating on the bonds issued by Qatari Diar Finance QSC, and the senior unsecured debt rating on SoQ Sukuk A QSC, a special purpose vehicle (SPV) registered in Qatar.
The ratings are constrained by limited monetary policy flexibility and still-nascent public institutions and limited disclosure, particularly with respect to government assets and their returns.
The agency projects population growth to average around six percent per year until 2016.
“In our view, structural weaknesses and challenges remain. First, the country’s public institutions are in the early stages of development compared with most ‘AA’ rated sovereigns. Second, given the fixed exchange rate with the US dollar, we view monetary policy flexibility as limited. Third, data gaps are significant and transparency is limited, compared with international standards; in particular, the government neither discloses its fiscal assets nor reports earnings on these assets,” the statement added.
“We could lower the ratings on Qatar if sharp and sustained declines in oil prices or banking sector developments were to weaken the country’s external or fiscal positions,” the agency said.
However, it said that ratings could be raised if there were a faster-than-expected maturation of domestic institutions and if growth became less dependent on public sector investment.
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