Fitch lowers Qatar’s credit rating to AA-

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Mon, 28 Aug 2017 - 10:23 GMT

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Mon, 28 Aug 2017 - 10:23 GMT

 Fitch Ratings- SolvencyIIWire- via Flicker

Fitch Ratings- SolvencyIIWire- via Flicker

CAIRO – 28 August 2017: International rating agency Fitch downgraded Qatar’s rating to AA- with a negative outlook, Reuters reported.

Fitch expected sovereign foreign assets to decline to 146 percent from the gross domestic product (GDP) in 2017.

Qatar’s GDP growth is also forecasted by Fitch to fall to 2 percent in 2017, 1.3 percent in fiscal year 2018/19, down from 2.2 percent in 2016.

Fitch said that outflow of non-resident deposits will keep increasing but at a slower pace than June and July, predicting the weakening ability of Qatar to control the budget deficit.

Last week, Fitch said in a report that the outflow of foreign deposits from Qatari banks will put banking funding and liquidity under pressure, adding that the Arab boycott of Qatar will increase banks' financing costs in the international debt markets.

“Withdrawal of non-domestic deposits is likely to increase competition among banks for domestic deposits, pushing up funding costs and squeezing margins,” Fitch explained.

Fitch believed that Qatar Central Bank has liquidized some of its reserves to support the country’s banks, which has pushed foreign reserves down to $24 billion by the end of June.

Qatar’s foreign deposits continued to fall in July as they dropped eight percent to record $43 billion, said Qatar Central Bank (QCB) last week.

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