Oil and politics risks to stable MENA sovereign outlook: Fitch Ratings | ZAWYA MENA Edition:
Outlooks are mostly stable on sovereign ratings in the Middle East North Africa Region (MENA), but renewed weakness in oil prices and regional and domestic political developments continue to pose a downside risk to ratings in 2020, Fitch Ratings says.
Among the 14 Fitch-rated MENA sovereigns, only Tunisia (B+) is on a Negative Outlook, maintained in June 2019. In August, Fitch downgraded Lebanon to 'CCC' from 'B-', in light of intensifying pressure on the country's financing model. A 'CCC' rating indicates that default is a real possibility, and Fitch does not typically assign Outlooks at this rating level. To different degrees, both Lebanon and Tunisia have wide twin deficits, high and rising public and external debt, a challenging political environment and tepid economic growth.
Headline fiscal balances will continue to weaken across much of the Gulf Cooperation Council (GCC) in 2020. We expect governments to reverse some of the fiscal loosening that took place amid an oil revenue windfall in 2018, but this will not be sufficient to completely offset the expected moderation of oil prices amid continued pressure on production volumes.
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