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Qatar soars on non-hydrocarbon investments

Dubai, November 19, 2013

The non-hydrocarbon investments will help Qatar sustain high growth rates of 5 to 6 per cent in 2013 and 2014, according to a new report.

Qatar's Aa2 government bond rating and stable outlook reflect the country's exceptional economic and government financial strength, said Moody's  Investors Service in a report published today.

The rating agency's report is an annual update to the markets and does not constitute a rating action.

The surge in hydrocarbon receipts in recent years has further strengthened government finances and bolstered the large current account surpluses, while domestic politics remain stable, said the report.

According to Moody's, Qatar's fiscal breakeven oil price remains amongst the lowest in the GCC region despite a large step-up in spending that has been driven in part by capital spending on infrastructure development.

Credit support also comes from the government's offshore financial assets which provide a considerable cushion to absorb oil price risks, it stated.

The ratings agency said that major infrastructure projects were in the pipeline, including a new airport, metro network, port and rail freight lines. Qatar's population is also among the fastest-growing in the world, it added.

Qatar's rating is constrained by shortcomings in transparency with regards to the size and composition of the government's assets. It also
shares with the other GCC member states a moderate degree of geopolitical event risk arising from regional and global tensions vis-a-vis Iran, said Moody's in its report.

The other challenges include the public sector's gross debt burden which has climbed sharply in recent years, especially when taking into account the debt of state-owned enterprises.

"The smooth transition of power conducted in June 2013, which saw the country's Emir Sheikh Hamad bin Khalifa Al-Thani, transfer power to his son and heir apparent, Sheikh Tamim bin Hamad Al-Thani reduces uncertainty related to succession risk and largely assures policy
continuity, especially with regard to economic and fiscal management," said the report.

The government's liquidity and external risks remain very low given QIA's large and presumably liquid assets, it added.-TradeArabia News Service




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