Fitch Ratings expects a rise in the debt of government-related entities in the six Gulf Arab countries next year. Revealing that this debt ranges between 14 percent of the gross domestic product in Kuwait and rises to 45 percent in the UAE, indicating that the sovereign ratings of Qatar and Oman are the most likely to be affected by the indebtedness of government-linked entities.
The Coronavirus pandemic has hurt the Gulf economies while they are already under pressure from low oil prices, which are a major source of revenue.
According to "Fitch", the economic downturn in 2020 will exacerbate debt levels and increase the risk of the debts of government-linked entities crystallizing in the budgets, disclosing that government support for these entities is expected, and attributed this to their importance to economies and their national hero status.
The agency estimates the total debt of government entities other than the banking system in the region at 30 percent of GDP during 2019, which is an increase of 3 percent compared to 2018, excluding the impact of reclassifying financial liabilities for airline leasing.
According to the agency, total bank debts associated with Gulf governments increased by 17 percent of GDP during 2019, and ranged between 14 and 46 percent in Bahrain and Qatar, respectively, pointing out that the upper limit of potential liabilities from banks appears to be greater than percentages, with the sector's assets range from 89 to 244 percent of GDP, in Saudi Arabia and Qatar, respectively.
Source (Al-Arabiya.net website, Edited)
