Fitch: MENA Sovereign Outlook Negative on Political Risk, Slow Reform

Fitch: MENA Sovereign Outlook Negative on Political Risk, Slow Reform:

"Heightened geopolitical risks in the once-stable Gulf Cooperation Council (GCC), combined with the inability of some oil exporters to adjust their budgets to a new oil price reality, result in a negative 2018 outlook for sovereign ratings in Middle East North Africa (MENA), Fitch Ratings says in a new report. Three of the 13 MENA sovereigns rated by Fitch (more than 20%) are on a Negative Outlook. None are on a Positive Outlook. Budget deficits will persist across the GCC and will stay in double digits in Bahrain and Oman, despite the oil price recovery. For the majority of sovereigns, fiscal break-even oil prices are still considerably above current or expected actual oil price levels. This is resulting in worsening sovereign debt and external asset ratios. We expect gross foreign and local market GCC issuance of USD110 billion in 2018, in tandem with drawdowns of around USD50 billion from wealth funds and external reserves. Price reforms have been scaled down and delayed in some parts of the GCC."



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