Strong credit outlook for Qatar seen on LNG expansion, strong public finances: Standard Chartered

Standard Chartered forecasts a strong credit outlook for Qatar as a result of its liquefied natural gas (LNG) expansion, strong public finances, robust balance sheet and positive ratings momentum.In its latest ‘MENA Credit Outlook 2024, Standard Chartered noted Qatar recorded a $11.5bn fiscal surplus during the nine months of 2023, approximately 4.9% of GDP, building on last year's 10.3% surplus, with public finances also set to improve further on rising LNG production.QatarEnergy's groundbreaking on the North Field expansion in October underscores the nation's efforts to increase LNG production, with several long-term offtake agreements already signed.This is in addition to a decline in government-funded capex following a period of elevated spending in the run-up to the 2022 FIFA World Cup. Standard Chartered estimates that, following a decline to 42% in 2022 from a high of 73% in 2020, Qatar‘s debt-to-GDP should fall further in 2023-24 as the government continues to use its sizeable fiscal surpluses towards debt repayment.Local banks’ foreign liabilities, historically a vulnerability of the sector, are also declining following regulatory directives by the central bank and slowing credit growth.After a sharp rise in 2018-21, Qatari banks’ foreign liabilities fell to QR655bn in September from a high of QR718bn in March 2022.The research also notes that any debt issuances by Qatar in 2024 will be opportunistic, as it is yet to issue Eurobonds since 2020, reflecting its deleveraging priorities.Muhannad Mukahall, CEO and head (Corporate, Commercial and Institutional Banking, Qatar) at Standard Chartered, said, "Qatar's strategic investments in LNG production and strong fiscal indicators reinforce our positive outlook for the nation’s continued economic growth in 2024.”