CAIRO – 21 June: Sovereign credit and liquidity of the banking sector will be impacted by the diplomatic rift with Qatar, CI Ratings pointed out in a research note Tuesday.
In case the crisis is prolonged, higher funding costs will likely occur as a result of higher risks and lower cross border funding from Qatari banks, the Cyprus-based think-tank explained.
“The ability to raise additional sovereign financing may well be impacted, although Qatar has large financial resources on which it can draw,” the note read.
The crisis will vary from bank to bank. The impact of the crisis will be measured by the extent of deposits from abroad that stay within the Qatari banking system.
Qatar’s account deficit and value of external assets will also be influenced by higher shipping costs, which will be presented due to longer trade routes, according to the report.