Qatari banks’ external debt: Is the problem over?

Qatari banks’ external debt: Is the problem over?

As major central banks continue to tighten monetary policy, financing conditions are becoming increasingly restrictive, with rising costs and weaker liquidity especially affecting emerging markets. Given that context, various banking systems from emerging economies such as Qatar are considered to be potentially vulnerable to changes in global liquidity. Tighter global financing conditions can affect banking systems directly or indirectly, with exposure to those different channels dictated by the particularities of bank funding and economies’ wider exposure to external debt. Direct channel impacts tend to weigh on banking systems with significant net external debts, including through lower rollover rates, which could translate into depleted liquidity buffers. Türkiye’s banks, for example, are considered to be the most exposed to this risk due to the potential for a sudden and significant decline in their ability to roll over maturing external debt. As for Qatar, the banking sector also has high, but declining external debt and there are mitigating factors to the less supportive market conditions. Indirect effects of tighter international financing conditions tend to be transmitted to banking systems via non-bank entities with significant exposure to external debt, including corporations and sovereigns. Indirect issues linked to corporations tend to be caused by difficulties