Qatar banks’ net foreign asset position sizeable, but manageable: EIU

Qatar banks’ net foreign asset position sizeable, but manageable: EIU

The net foreign asset position of Qatar’s banks is "sizeable but manageable"; the Economist Intelligence Unit said and noted the sector is "well regulated".

In its latest update, the EIU said "while net external liabilities pose risks, strong prudential indicators insulate (Qatar’s) banks from a deterioration in asset quality arising from the 2020 recession."

"The non-performing loan ratio is low, and profitability levels are moderate," the EIU noted.

Macroeconomic indicators have "improved" since the pandemic-induced slump in 2020, including a "return to positive" global and Qatari economic growth.

“We estimate that the fiscal account will have returned to surplus in 2021 owing to recovering global oil and gas prices, which will ease public debt pressures. Qatar's debt obligations are high, but its ability to fully service them is not in doubt, supported by ample foreign reserves and the assets of the Qatar Investment Authority (QIA), the sovereign wealth fund,” the EIU said.

The "rating is supported by a recovery" in international hydrocarbons prices and an estimated shift from deficit to surplus on the current account in 2021. The Qatari riyal's peg to the dollar will continue to be backed by "healthy" foreign reserves and QIA assets, the EIU said.

That said, the EIU