2022 outlook stable for GCC on higher oil prices: Moody’s

2022 outlook stable for GCC on higher oil prices: Moody’s

The outlook for the sovereign creditworthiness for GCC countries is stable over the next 12 to 18 months, due to supportive oil prices and higher hydrocarbon production, Moody’s Investors Service said on Tuesday. Supportive oil prices and higher production than in 2021 will strengthen public finances in 2022, providing governments with greater fiscal capacity to support the economic recovery and diversification efforts, and more time to implement fiscal reforms, the ratings agency said in a report. ‘Our outlook for sovereign creditworthiness in 2022 in the GCC is stable overall, reflecting our expectations for the fundamental conditions that will drive sovereign credit over the next 12-18 months, relative to 2021,’ Moody’s said. Moody’s noted that significantly higher oil prices and recovering economic activity, helped by rapid vaccination rollouts, supported sovereign credit quality in the GCC region in 2021. It added that government finances will continue to strengthen, although balance-sheets remain weaker than pre-pandemic for many GCC sovereigns. ‘Fiscal positions will continue to improve in 2022. Our baseline projections assume that oil prices will average US$65-US$70 per barrel in 2022, broadly in line with the average price in 2021 and around 60 per cent higher than the average in 2020.’ ‘We also