News

Moody’s gives GCC sovereigns negative rating

Moodys_websiteSovereigns in the GCC have been given a negative outlook for 2020 by rating agency Moody’s which has cited slow fiscal reforms, weak growth and higher geopolitical risk as the reasons for the downgrade. Moderate oil prices is another contributory factor and Moody’s expects a further gradual erosion of creditworthiness if oil prices remain moderate overt the medium-term. "The pace of fiscal consolidation will remain slow in the GCC in 2020 and fiscal strength will continue to erode in the absence of significant new fiscal measures and reforms," said Alexander Perjessy, a Moody's vice president and senior analyst. "This will be exacerbated by existing commitments to limit oil production, which will reduce government revenue." Lower oil prices will mean less revenue for governments to spend on fiscal reforms and will constrain growth in the non-oil sectors. In addition, the region’s geopolitical risk has risen amid the current tensions between the US and Iran. Moody’s negative rating outlook for GCC sovereigns comes just weeks after it issued a similar downgrade from GCC corporates. ©2020 funds global mena 

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