On Eve Of Football World Cup, Qatar Gets A Ratings Boost

Ratings agency Moody’s Investors Service changed the outlook on its credit rating for Qatar from stable to positive on November 2, while affirming the country’s Aa3 rating. The improvement comes as the country prepares to host the football World Cup – an event which is putting it under an unusually high level of scrutiny over its human rights record.

Like other Gulf hydrocarbon exporters, Qatar’s finances are in strong shape at the moment, helped by high oil and gas prices. Moody’s said it had changed the outlook as it now seemed the country’s recently-improved debt position could be sustained over the medium-term “even if oil and natural gas prices moderate over the next few years”.

It said Qatar’s plans to expand its liquefied natural gas (LNG) production capacity would help to compensate for any fall in prices. In addition, the government is expected to cut capital spending once the FIFA World Cup is over.

The football tournament kicks off on November 20 with a game between the hosts and Ecuador. More than 1 million people are expected to attend matches in the Gulf country, which are being held at a eight stadia in and around the capital Doha.

The government ramped up capital spending after 2010, when it won the rights to host the World Cup, spending on average some $20 billion a year on improving its infrastructure and preparing for the tournament. But with everything now in place for the tournament, the trend is set to ease off.

In the meantime, the revenue windfall that has come from the surge in oil and LNG prices since 2020 has turned what was a small budget deficit in 2020 into a large surplus this year – expected to be around 9.5% of gross domestic product (GDP).

The government is expected to take advantage of that by reducing its debts, from 73% of GDP in 2020 to around 42% this year.

LNG exports were equivalent to nearly 30% of GDP in 2021, but the country is also investing heavily in expanding its output, from around 77 million tons a year to 126 million tons a year by 2027/28.