By The Qatar Insider
August 8, 2017
Moody’s, the international credit ratings agency, cut the Qatari banking system’s outlook from “stable” to “negative,” citing weaker operating conditions and sustained funding pressures.
Qatar – which has faced a blockade from neighboring countries after it refused to commit to eradicating terrorism and terror financing – is in a dangerous position which, if prolonged, “could trigger some outflows of foreign deposits and other external funding,” added Moody’s.
CNBC reported Moody’s was “concerned about the banks’ ability to access external funding” and said outflows of foreign deposits and cash “would reduce Qatari banks’ liquidity buffers, with domestic deposits currently tight amid lower oil revenues.”
It also cut the country’s expected GDP growth to 2.4 percent, a sharp drop from the 13.3 percent it enjoyed during the period from 2006 to 2014.
The blockade has hit Qatar hard, revealing how heavily the country relies on external funding and oil revenue.
But Doha remains defiant and refuses to take steps to address the blockade – namely, agreeing to neighboring countries’ simple list of six principles centered around fighting terrorism. Last month, the country’s Finance Minister Ali Sharif al-Emadi said, “We have sovereign wealth funds of 250 percent of gross domestic product, we have Qatar Central Bank reserves, and we have a ministry of finance strategic reserve.”
That may be true, but it certainly didn’t impact Moody’s decision. Qatar should stop pretending that it can withstand such a blockade and that it doesn’t finance terrorism, and start addressing real problems – both for the sake of its financial health and for the region’s security.