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Published on 03/07/2016 at 11:00 – Updated 03.07.2016 11:00
Moody’s lowered the rating of the two Gulf countries and placed the other oil-exporting countries in the region under surveillance for a possible downward revision of their notes.
Moody’s lowered the rating of Oman and Bahrain. A reduction which, according to the rating agency, “reflects the impact of the steady drop in oil prices.” The review of Moody’s regards Saudi Arabia, which has seen its rating downgraded two notches to A- last month, and the United Arab Emirates, Kuwait and Qatar.
The agency rating considers the oil barrel price should be around $ 33 in 2016, $ 38 in 2017 and 48 dollars in 2019.
oil and gas between 86 and 90% of budget revenues
The rating of Bahrain was lowered one notch to Ba1. Oil and gas account for 75% of exports and had between 2010 and 2014 to 86% of budget revenues of the State, which is a relatively small exporter, says Moody’s.
Meanwhile, Oman saw its rating lowered two notches to A1. For this country, oil and gas account for 90% of fiscal revenues. Oman is less financially solid, the amount of its financial assets representing only three years of spending, said the rating agency.
Saudi Arabia budget deficit of 15%
the drop in oil prices has deteriorated trade balances, economies and therefore the credit profiles of the Gulf states, according to Moody’s. In Saudi Arabia, oil now accounts for 84% of exports, 40% of gross domestic product (GDP) and 62% of consolidated budget revenues. Before the fall in oil prices, the revenues from black gold represented about 90% of these revenues.
Between 2013 and 2015, the oil revenues of the Kingdom, as a percentage of GDP, fell 23%, while the budget balance moved from a surplus of 6.5% of GDP to a deficit of 15%. During the same period, the balance of current trade of Saudi Arabia has slid from a surplus of 18.2% of GDP to a deficit of 5.7%, says Moody’s.
Measures’ austerity
the countries of the Gulf cooperation Council (GCC) have been forced to take austerity measures to reduce their subsidies for energy to counter the decline in oil revenues.
Moody stressed’s last month that these measures would help reduce the budgetary problems of these countries but would not be enough to erase born deficits of falling oil prices.
Revenue, with AFP
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