State-related entity debt in Gulf to rise next year, Fitch says | Reuters
Government-related-entity (GRE) debt in the six Gulf Arab states, wihch include Saudi Arabia and the United Arab Emirates, will increase next year, ratings agency Fitch said on Thursday.
The coronavirus pandemic has strained the economies of Gulf countries already under pressure from low oil prices, a key source of state revenue.
“The economic contraction in 2020 will further exacerbate leverage ratios and magnify the risks of GRE liabilities crystallising on government balance sheets,” it said.
Government support for state-related entities is expected, Fitch said, citing their importance to the national economies and status as “national champions”.
It said Qatar and Oman’s sovereign ratings were the most likely to be affected by GRE indebtedness due to their exposure against the strength of their balance sheets.
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