The Arab Investment & Export Credit Guarantee Corporation “Dhaman” revealed a decrease in sovereign ratings and political, economic, financial, and operational risk ratings of most Arab countries in 2023, according to 30 indicators issued by 15 major credit rating and risk assessment agencies around the world.
The Director-General of “Dhaman” Mr. Abdullah Ahmad Al-Sabeeh, explained in the editorial of the first quarterly bulletin “Dhaman Al-Istethmar” for 2024, that this disparity was the reflection of regional events in 2023, including the escalation of political happenings, the aggression on the Gaza Strip and continued armed conflicts in Sudan, Yemen and a number of Arab countries, in conjunction with growth slowdown due to the decline in oil production and revenues and the surging crises of the high-cost of living and debt crisis.
Al-Sabeeh emphasized that “Dhaman”, based on its awareness of the paramount significance of the indices of sovereign and risk ratings in showing how much multinational companies, and finance, investment and trade institutions are interested in Arab countries, continues to monitor around 30 indicators of sovereign ratings and political, economic, financial and operational risk assessment issued by 15 specialized international agencies, and compare them with the previous year. Key conclusions come as follows:
• Sovereign ratings stabilized in 4 Arab countries, and improved in Qatar, UAE, Saudi Arabia, and Oman, compared to a decline in the rating of Morocco, Egypt, Tunisia and Lebanon, while the outlook for six countries changed, according to the 4 major international agencies.
• The Gulf Cooperation Council (GCC) countries, then Morocco, Jordan and Egypt topped Arab rankings in most assessments related to indices of all kinds of risks.
• The average global ranking of Arab countries declined in the Fitch and PRS indices that assess the countries’ political, economic, and financial risks in short, medium, and long terms.
• A decline in the position of Arab countries in the country risk indices for exports and direct investments, issued by “Credendo” agency and in the commercial risk index of the Japanese “NEXI” agency.
• The average global ratings of Arab countries improved in country risk indices, issued by “Allianz Trade”, “Atradius” and “Coface” agencies.
• The rankings of most Arab countries stabilized in various risk ranking indices, published by “Dun & Bradstreet” agency and the Organization for Economic Cooperation and Development (OECD), while the preferred payment terms remained unchanged in trade transactions with Arab countries.
• The average rankings of Arab countries in the Global Peace Index improved, advancing in 10 countries, topped by Oman, while 7 countries fell off.
• Economic risks came on top of the risks expected to threaten Arab countries in the next two years mainly including economic downturn, inflation, and public debt, according to the World Economic Forum.
Al-Sabeeh stated that in addition to the expected efforts of Arab countries to enhance their political, security, economic and financial stability to improve their rankings in these indices in the upcoming period, this depends on several factors, including:
• Forecasts for the political and security situation in Gaza, Sudan, Yemen, Syria Libya, Lebanon, and Somalia, and to a lesser extent in Iraq, Tunisia, and Egypt.
• The outlook of the external economic performance of the region’s countries, mainly related to oil prices, trade, investment, tourism as well as borrowing and debt arrangements.
• The reflections of international conflicts and events, chiefly the Russian-Ukrainian war, the U.S-China conflict and the results of elections in 40 countries in 2024.
Al-Sabeeh noted that despite the reservations of the corporation and some regional governments and institutions about a number of these ratings issued by international agencies of sovereign and country risks assessment, this does not disparage the fact that they are significant and should be monitored. The aim is to improve the position of Arab countries and standing as a significant step towards developing the investment climate and business environment in the region.
In this context, he emphasized that the corporation’s readiness to play its role in compiling specialized and comprehensive reports on Arab countries’ situation, while underlining the significance of communication with research teams entrusted with issuing the indices of sovereign ratings, and political, economic, financial and operational risk ratings to improve the ratings of the region’s countries and contribute to include the Arab countries that have been excluded from these ratings.
