Fitch Ratings indicated that it has a 'stable' outlook on 10 out of the 13 sovereigns that it rates in the Middle East and North Africa (MENA) region. It said that it has a 'negative' outlook on Oman and Tunisia, and a 'positive' outlook on Egypt. It noted that the ratings of Gulf Cooperation Council (GCC) sovereigns lie in the 'A' and 'AA' range, given their high GDP per capita and strong external balance sheets. In contrast, it said that rated countries in the Levant and North Africa mostly fall under the 'B' and lower 'BB' range, mainly due to weaker public or external finances and more acute political risks. It considered that the outlook for MENA sovereigns in 2019 will be mostly affected by fluctuations in oil prices, the countries' commitment to fiscal reforms, and political risks. It noted that its assumption of lower oil prices of $65 p/b in 2019 could reinforce pressure on the debt and net foreign asset metrics of oil exporters. However, it considered that Kuwait, Abu Dhabi and Qatar are well-placed to face a prolonged decline in oil prices, due to their large sovereign wealth funds and low fiscal break-even oil prices. It said that fiscal authorities in the GCC will need to further increase their tax revenues and to enact other tax measures in the context of lower oil prices. In parallel, it pointed out that oil importers could face challenges in stabilizing their public and external finances amid tighter global financial conditions and heightened political instability.
Source: Fitch Ratings