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Fitch retains Qatar's ratings at AA, oil key weakness

Staff Writer |
Fitch Ratings maintained the sovereign ratings of Qatar at AA with a Stable Outlook, citing its large sovereign assets and fiscal adjustment efforts.

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The agency, however, said that the hydrocarbon dependence is a key rating weakness, with oil and gas extraction averaging 50 percent of GDP and 80 percent of external receipts and government revenue.

Other weaknesses include a government debt level above those of rated peers, and mediocre scores on the World Bank's measures of governance and the business environment, Fitch said.

The fall in oil and gas prices has resulted in sharply lower government revenues, but the agency observed that a fiscal adjustment is under way. Fitch assumed that the full-year spending to be close to budgeted amounts.

Fitch also noted that the authorities are financing deficits by issuing debt instead of drawing on assets held by the Qatar Investment Authority.

Assets of QIA, which are not officially disclosed, are forecast to rise to an estimated $338 billion in 2016 from $318 billion in 2015, Fitch said.

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