Riyadh- Ratings agency Moody’s has cut its outlook on the country’s sovereign credit to “negative” from “stable”, driven by the risks of economic and diplomatic boycotting that Doha is facing by the countries calling for fighting terrorism.
Moody’s said in a statement published on Wednesday that its outlook of Qatar has dropped from “stable” to “negative” while keeping its credit rating at Aa3. It noted that the key driver for the outlook change is the economic and financial risks arising from the ongoing dispute between Qatar and a number of countries.
“The likelihood of a prolonged period of uncertainty extending into 2018 has increased,” Moody’s said.
These developments on the level of outlook coincide with some foreign investments in Doha starting to show concerns over the future of the Qatari economy. This indicates that some capitals are expected to withdraw from Qatar.
The negative outlook of Moody’s reflects the size of risks on investment in Doha, especially that the countries calling for confronting terrorism continue to boycott Qatar at the economic and diplomatic levels.
According to Moody’s, Qatari foreign debts jumped to 150 percent of GDP, urging it to cut down rating to Aa3 from Aa2 with changing outlook from “negative” to “stable” then to “negative” back on Wednesday.
Given these developments, the Qatari riyal is facing additional pressures, knowing that foreign investors are currently testing pegging the Qatari riyal to the American dollar, according to Bloomberg.
It added that the boycotting caused a temporary shortage of dollar, leading to weaker circulation of the riyal.
The pressure on the currency also goes back to S&P similar downgrading of Qatar’s rating – Qatari riyal is pegged to the dollar since July 2001.