“Dhaman Al-Istithmar” #1-2022: Stability in the sovereign ratings of Arab countries by the end of March 2022

Issue # 1 (January– March 2022)

The Arab Investment & Export Credit Guarantee Corporation (Dhaman) revealed the stability of Arab countries in the sovereign credit ratings of main world credit rating agencies: Standard & Poor’s, Moody’s, Fitch Ratings, Capital Intelligence and HIS Markit, for the year 2021. But, only five Arab countries dropped in 2021 ratings, compared with 2020.

In its first quarterly bulletin for 2022, the corporation said that four Gulf countries: UAE, Kuwait, Qatar and Saudi Arabia, topped Arab ratings for 2021 by getting Rating A with its different degrees, as six countries: Oman, Jordan, Bahrain, Egypt, Morocco and Algeria were rated (A) in different degrees. Iraq and Tunisia ranged between (B) and (C), while five countries, notably Mauritania, Somalia, Djibouti, Palestine and Comoros were not included.

Concerning country political, economic, financial and operational risks indexes, a specialized report compiled by the corporation showed changes in the positions of these countries between 2020 and 2021 in 10 groups of the indexes of key specialized agencies for 2021 as follows:

• Improvement in the positions of Arab countries in Fitch and PRS indexes for country political, economic, financial and operational risks in short, medium and long terms, based on lower risks between 13 and 16 Arab countries.
• Improvement in the positions of Arab countries in Coface and Euler Hermès indexes for country and business risks between four and five countries.
• The stability of Arab positions in Nexi index for commerce risks, Credendo for export and import risks and dun & bradstreet, with stable preferred payment terms for Arab countries’ transactions during 2021.
• Improvement in Arab positions in Global Peace Index and Worldwide Governance Indicators, with the best performance in sub-indexes for rule of law, regulatory quality and government effectiveness.

The report emphasized that Arab governments should move immediately to improve their positions in these indexes in the aftermath of the latest regional and international geopolitical developments, especially as the region has been witnessing several political, economic, social and institutional events for decades now, triggering off high-risk ratings by global sovereign rating and risk assessment agencies. This has negatively affected the investment and business climate in the region’s countries, and their ability to attract investment, trade and financing transactions of multinational companies and international investors.

The corporation believes that despite reservations from some regional governments and institutions about some of these ratings, this can’t disparage the significance and necessity of following up and considering how these ratings are made, and having direct communications with their research teams, with a view to improving the positions and ratings of Arab countries only as the key to bettering the investment and business climate in the region.

The corporation urged Arab research agencies to work together to issue sovereign and country risk ratings for regional and world countries, taking remarks in some global ratings into account.