Middle East countries which are energy exporters have better investment ratings than oil importers in the region, Fitch says, and that gap is widening.
Paul Gamble, director in the sovereigns group at Fitch, told a briefing this week that the ratings gap has never been bigger and that:
If you look at the outlooks, it has the potential to widen further.
The energy exporters – Bahrain, Kuwait, Saudi Arabia, Abu Dhabi and Ras Al-Khaimah – all are rated investment grade by Fitch. Saudi Arabi’s rating has a positive outlook while the others have at least a stable outlook. Of the energy importers, meanwhile, two are on negative outlook – Egypt and Tunisia – while Morocco, Israel and Lebanon are stable. Only Israel and Morocco are investment grade.
Many of these countries may be too dependent on their energy sectors. But most energy exporters have based their budget calculations on a low price for oil, giving them room for manoeuvre if oil prices do fall, Gamble says:
The buffers are huge …budgets (are) based on unrealistically low oil prices