The wealthier Gulf-based oil and gas producers – underpinned by their strong fiscal and current-account balances – have, in the main, either resisted the plummeting scores seen for Egypt, Tunisia, Libya et al, or still rank comparatively highly for their sovereign safety.
However, the failure of the Gulf region to catch-up politically to match its economic dynamism demonstrates background weaknesses still to be addressed, and which continue to impact on country risk profiles, such as Bahrain’s.
Its instabilities are reflected in downgraded scores for five of the six political risk indicators this year, four of which (information access/transparency, institutional risk, the regulatory and policy environment and government stability) all score less than 5.0 out of 10; the latter just 3.9.
Various other countries in the region also score lowly for information access/transparency, corruption and the other political risks, which had perhaps been too easily dismissed before the Arab Spring uprisings, but are a main source of the problems now being witnessed across the region.
MENA is also split three ways from a risk perspective, it would seem, with the safer, more creditworthy Gulf elite – five of which are still ranked tier-two in ECR’s five risk tiers –contrasting with the North African and Levant tier-four sovereigns offering portfolio options but with attendant medium-to-high risks. They include Lebanon, improving in spite of the Syrian turmoil as its budget deficit narrows (Lebanon’s budget deficit tightens on lower expenditures).
A third group, at the extreme, are the six larger, tier-five sovereigns all undermining the region’s prospects – among them Iran, Iraq and Libya (see table, above) with their combinations of low scores across the board and poor credit access.
The gap between the safest sovereign Qatar (lying 18th on ECR’s global scoreboard) and the riskiest Syria (in 158th place) has begun to narrow again after reaching a peak during the third quarter of last year.
However, at almost 50 points, the differential is still extreme as Syria’s internecine strife continues. Moreover, 11 of the region’s 18 sovereigns score less than 50 points out of a possible 100, and only six are to be found within the top-50 safest sovereigns globally (see ECR’s global risk data table).
Meanwhile, if there is one country truly displaying some promise for its risk shift it is Morocco, still on the cusp of tier-three status. However, the fact it has failed to achieve that accolade just yet highlights the various problems it still faces (more below).
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