Positive outlooks (10) on EMEA emerging markets sovereigns outnumber negative ones (three) by a ratio of over 3 to 1. Despite the improving trend, emerging EMEA sovereign ratings are two notches below where they were in the run-up to the 2008 global financial crisis. This is on both a GDP-weighted average and an arithmetic mean basis. The trend, therefore, indicates a stabilization rather than a long-term improvement for the 55 emerging sovereigns we rate in EMEA, a region spanning Europe, the Middle East, Central Asia, and North and sub-Saharan Africa.

Government Debt To GDP Is Up

Government debt to GDP across the region (excluding the large energy exporters) is 8 percentage points of GDP higher on average than it was before the pandemic and the Russia-Ukraine war. Positively, higher rated sovereigns have managed to reduce their foreign currency debt, on average, as a percentage of GDP since the pandemic. This reflects more stable local currencies and deeper domestic capital markets. The story has been different for sovereigns in the 'B' category and below (almost half our sovereign ratings in the region; we exclude sovereigns in selective default). They have seen an increase (albeit a slight one) in foreign currency debt, on average, as a percentage of GDP. Notably, the cost of debt remains a major drain on public resources in many lower rated sovereigns, with Egypt, Kenya, Bahrain, and Angola all set to spend over 25% of government revenues on interest payments for 2024. With so much foreign currency debt, fiscal stability is contingent upon exchange rate stability--something that most emerging markets cannot take for granted in the post-QE era.

Those On Positive Outlook Share Some Similarities

The 10 improving credit stories--sovereigns with ratings on positive outlooks (see table)--share some common factors:

• In the wake of spillovers from post-pandemic inflation, dollar strength, and higher global interest rates, some sovereigns have taken measures to improve their fiscal and monetary policy coordination. They've done this under the aegis of the IMF, for example an Extended Credit Facility or Extended Fund Facility (Egypt and Cote d'Ivoire), a Resilience and Sustainability Facility (Morocco), or a Stand-by Arrangement (Serbia).
• All are classified as lower middle income or above, with reasonably large financial sectors (measured by total assets of all monetary financial institutions as a percentage of GDP) and deeper domestic capital markets than the EMEA emerging markets average.
• The 10 are posting stronger fiscal outcomes, either because net government debt is below 50% of GDP (Bulgaria, Oman, Ras Al Khaimah, Serbia, Turkiye); or because underlying budgetary settings are tight or tightening (Cote d'Ivoire, Croatia, Egypt, Montenegro, and Morocco); or both (Oman, Ras Al Khaimah, and Serbia).
• Five (Croatia, Egypt, Montenegro, Morocco, Turkiye) have large tourism and services economies that have grown well since 2022. Even smaller tourism sectors such as those in Bulgaria, Oman, and Ras Al Khaimah have seen significant and growing tourism earnings.
• Most of these sovereigns have quite open economies, meaning they generate more foreign currency than peers in relation to GDP. This has shielded them from the exchange-rate shortages and devaluations experienced by the more closed economies. Exports of goods and services average 45% of GDP for the 10; only Cote D'Ivoire (25%) and Egypt (17%) fall significantly below this.
• The group also includes some economies expected to benefit from rising hydrocarbon production: Egypt (LNG), and Cote d'Ivoire and Oman (oil and gas). And Croatia, while not a gas exporter, produces sufficient quantities to cover 40% of domestic consumption.
• Most of the 10 have a history of operating fixed exchange-rate regimes. Bulgaria, Cote d'Ivoire, Montenegro, Morocco, Oman, and Ras Al Khaimah all operate currency boards or pegs. Cote d'Ivoire and Croatia are members of monetary unions alongside many of their key trading partners. Despite the associated limits on monetary flexibility, none of these economies appear to have seen their competitiveness diminish. At least for now, this seems to be a greater problem for Egypt and Turkiye, where the exchange rate floats but exchange-rate pass-through into inflation is elevated (partly due to high levels of dollarization).

Most Negative Outlooks Reflect Geopolitical Risks

Our negative outlooks principally reflect worsening fiscal imbalances often connected with social tensions or military conflict:

• In Kenya, rising popular resistance to budgetary tightening could mean that efforts to reduce the overall budgetary deficit to below 5% of GDP may fail. Given that just over half of Kenya's debt (equivalent to 36% of GDP) is foreign-currency-denominated, pressure on the exchange rate poses another risk to debt sustainability, as well as to the budget given that a weaker shilling raises the cost of interest payments on foreign currency debt.
• Israel: The nearly 10-month conflict with Hamas has taken a toll on public finances, putting debt to GDP on an upward path, but Israel's external and policy buffers remain considerable. An escalation of hostilities beyond Gaza would impose new pressures on budgetary outcomes and growth.
• Ukraine: The war with Russia has imposed enormous costs on Ukraine's economy and its people. In real terms, the economy is 22% smaller than it was in 2021, and exports are down 41%. The budgetary deficit widened to 20% of GDP last year and will remain just below that for 2024. We expect the Ukrainian government to have completed formal discussions on debt restructuring by Aug. 1, 2024.

Table 1

Table 2

Abu Dhabi (AA/Stable/A-1+)

• Analyst: giulia.filocca@spglobal.com
• Latest publication: (Full Analysis) Emirate of Abu Dhabi, May 27, 2024

Rating score snapshot:

• Institutional assessment: 3
• Economic assessment: 1
• External assessment: 2
• Fiscal assessment – Flexibility and performance: 1
• Fiscal assessment – Debt burden: 1
• Monetary assessment: 4

Outlook: Stable

The stable outlook reflects our expectation that Abu Dhabi's fiscal and external positions will remain strong over the next two years, amid continued prudent policy-making and our hydrocarbon sector assumptions.

Downside scenario

We could lower the ratings if Abu Dhabi's strong government balance sheet and net external asset position deteriorate materially.

Upside scenario

We could raise our ratings if we observe a reduction in geopolitical risks or an increase in economic diversification more in line with similarly rated peers. We could also see ratings upside if there is evidence of pronounced improvements in data transparency on fiscal assets and external data. Furthermore, measures to improve the effectiveness of monetary policy in the emirate, such as establishing deep domestic capital markets, could be positive for the ratings.

(Latest research update published on Nov. 24, 2023)

Table 3

Albania (BB-/Stable/B)

• Analyst: amr.abdullah@spglobal.com
• Latest publication: Albania Upgraded To 'BB-' From 'B+' On Improved Fiscal And External Positions; Outlook Stable, March 22, 2024

Rating score snapshot:

• Institutional assessment: 5
• Economic assessment: 4
• External assessment: 3
• Fiscal assessment – Flexibility and performance: 3
• Fiscal assessment – Debt burden: 4
• Monetary assessment: 5

Outlook: Stable

The stable outlook reflects our view that Albania can continue to manage the indirect economic effects from the Russia-Ukraine conflict thanks to its strong external buffers, despite the economic slowdown in Europe, Albania's largest trading partner. In addition, the country's modest growth prospects and the government's fiscal consolidation efforts should facilitate a modest reduction in debt over our 2023-2026 forecast horizon.

Downside scenario

We could lower the ratings over the next year if the public debt stock continues to increase significantly beyond our expectations, due to high fiscal deficits or the materialization of contingent liabilities from public-private partnerships (PPPs).

Upside scenario

We could consider raising the ratings over the next year if external funding risks decrease materially or if a pronounced reduction in fiscal deficits yields a fall in public debts levels. We could also raise the ratings if the institutional framework is strengthened, possibly through structural reforms as a part of the country's EU accession objective.

Table 4

Angola (B-/Stable/B)

• Analyst: leon.bezuidenhout@spglobal.com
• Latest publication: Angola 'B-/B' Ratings Affirmed; Outlook Remains Stable, Feb. 18, 2024

Rating score snapshot:

• Institutional assessment: 5
• Economic assessment: 6
• External assessment: 6
• Fiscal assessment – Flexibility and performance: 6
• Fiscal assessment – Debt burden: 6
• Monetary assessment: 5

Outlook: Stable

The stable outlook balances the country's large external funding needs and financing risks over the next 12 months, against broadly supportive oil prices and relatively stable reserves.

Downside scenario

We could lower the rating if a deterioration in the external environment, or an increase in social pressures, limits the government's ability to service its external commercial debt. This could stem from a weakening of the government's access to external funding, or further exchange rate shocks tied to lower oil prices or volumes.

Upside scenario

We could raise the rating if economic and fiscal reforms support a sustained recovery in both the oil and non-oil economy, while reducing the debt-servicing burden and borrowing costs and increasing foreign currency reserves beyond our projections. However, we view such a scenario currently as unlikely.

Table 5

Armenia (BB-/Stable/B)

• Analyst: amr.abdullah@spglobal.com
• Latest publication: Armenia 'BB-/B' Ratings Affirmed; Outlook Stable, Feb. 23, 2024

Rating score snapshot:

• Institutional assessment: 5
• Economic assessment: 4
• External assessment: 4
• Fiscal assessment – Flexibility and performance: 4
• Fiscal assessment – Debt burden: 4
• Monetary assessment: 4

Outlook: Stable

The stable outlook reflects a balance between Armenia's favorable economic growth prospects over the next year and comparatively modest net general government debt, against existing balance of payments vulnerabilities and elevated geopolitical risks.

Upside scenario

We could take a positive rating action should Armenia's fiscal or external balance sheets are stronger than our current expectations while geopolitical risk remain contained.

Downside scenario

We could lower the ratings if a pronounced reversal in accumulated financial and labor inflows from Russia slows growth, causes exchange rate depreciation, and weakens fiscal and external balance sheets. Additionally, although it is not our base-case scenario, repercussions from escalating geopolitical tensions with either Azerbaijan or Russia could constrain the ratings.

Table 6

Azerbaijan (BB+/Stable /B)

• Analyst: maxim.rybnikov@spglobal.com
• Latest publication: Azerbaijan Ratings Affirmed At 'BB+/B'; Outlook Stable, June 7, 2024

Rating score snapshot:

• Institutional assessment: 5
• Economic assessment: 5
• External assessment: 2
• Fiscal assessment – Flexibility and performance: 1
• Fiscal assessment – Debt burden: 1
• Monetary assessment: 5

Outlook: Stable

The stable outlook reflects our expectation that, despite a projected medium-term decline in oil production, Azerbaijan's significant fiscal and external buffers will help to shield the economy against any renewed terms-of-trade shocks.

Downside scenario

We could lower the ratings if Azerbaijan's fiscal balances prove weaker than we expect over the medium term. This could happen, for example, because aging oil fields result in oil production declining faster than we expect. Reduced hydrocarbon earnings could also weigh on Azerbaijan's broader economic performance, compared with that of peers.

We could also lower the ratings in a scenario of renewed military conflict with Armenia.

Upside scenario

We could raise the ratings if regional geopolitical risks subsided while Azerbaijan accumulated significant additional fiscal buffers, compared with our current forecast.

Table 7

Bahrain (B+/Stable/B)

• Analyst: giulia.filocca@spglobal.com
• Latest publication: Bahrain 'B+/B' Ratings Affirmed; Outlook Remains Stable, May 24, 2024

Rating score snapshot:

• Institutional assessment: 4
• Economic assessment: 4
• External assessment: 5
• Fiscal assessment – Flexibility and performance: 6
• Fiscal assessment – Debt burden: 6
• Monetary assessment: 4

Outlook: Stable

The stable outlook indicates that we expect the government will continue implementing measures to reduce the budget deficit, while benefitting from additional support from other Gulf Cooperation Council (GCC) sovereigns, if needed.

Downside scenario

We could lower the ratings if the government's net debt and debt-servicing burden increased significantly beyond our assumptions, presenting funding challenges. We could also take a negative rating action if foreign currency reserves declined sharply, limiting the government's ability to service its external debt and weighing on monetary policy effectiveness.

Upside scenario

We could raise the ratings if the government's budgetary position improved significantly beyond our expectations, contributing to a steady reduction in net debt to GDP. We could also raise the ratings if widening current account surpluses were to support a significant and sustained improvement in Bahrain's external position.

Table 8

Benin (BB-/Stable/B)

• Analyst: etienne.polle@spglobal.com
• Latest publication: Benin Upgraded To 'BB-/B' On Resilient Economic Growth; Outlook Stable, April 19, 2024

Rating score snapshot:

• Institutional assessment: 4
• Economic assessment: 4
• External assessment: 4
• Fiscal assessment – Flexibility and performance: 3
• Fiscal assessment – Debt burden: 5
• Monetary assessment: 5

Outlook: Stable

The stable outlook balances our expectation of Benin's sustained and resilient economic growth, declining budget deficit, and favorable government debt profile with still high external imbalances, low GDP per capita, and regional institutional uncertainties.

Downside scenario

We could lower the ratings if the country's external position significantly deteriorates, for example from lower-than-expected export revenues.

Additionally, while not our baseline, we could also lower our ratings on Benin if external headwinds were to persist and negatively and significantly hamper economic growth and, as a result, budgetary consolidation.

Upside scenario

We could raise the ratings if strong reform implementation, coupled with strong economic performance, results in faster-than-currently-projected budgetary consolidation, particularly through materially higher government revenues.

Table 9

Bosnia and Herzegovina (B+/Stable/B)

• Analyst: niklas.steinert@spglobal.com
• Latest publication: Bosnia and Herzegovina 'B+/B' Ratings Affirmed; Outlook Stable, Feb. 2, 2024

Rating score snapshot:

• Institutional assessment: 5
• Economic assessment: 4
• External assessment: 3
• Fiscal assessment – Flexibility and performance: 3
• Fiscal assessment – Debt burden: 1
• Monetary assessment: 6

Outlook: Stable

The stable outlook reflects BiH's resilient economic growth prospects, as well as the sovereign's favorable fiscal position that we expect will endure over the next few years. The outlook also captures our view that domestic political contentions will not escalate further, although future confrontations remain a risk given BiH's complex institutional arrangements.

Downside scenario

We could lower the ratings if domestic political tensions significantly escalate, particularly if they jeopardized government debt service, for example, by weakening indirect tax revenue or foreign currency reserves at the central bank.

Upside scenario

We could raise the ratings on BiH if we see more consensus-based domestic policymaking that, over the medium term, potentially accelerates structural reforms--including those relating to the country's EU accession--and economic growth.

Table 10

Botswana (BBB+/Stable/A-2)

• Analyst: ravi.bhatia@spglobal.com
• Latest publication: Botswana Ratings Affirmed At 'BBB+/A-2'; Outlook Stable, March 15, 2024

Rating score snapshot:

• Institutional assessment: 3
• Economic assessment: 5
• External assessment: 2
• Fiscal assessment – Flexibility and performance: 3
• Fiscal assessment – Debt burden: 1
• Monetary assessment: 4

Outlook: Stable

The stable outlook indicates that we anticipate that Botswana's GDP growth will remain relatively resilient and that this will, in turn, support export receipts and fiscal revenue.

Downside scenario

We could lower our ratings if Botswana's external or fiscal performance were materially weaker than our current forecasts. Such a scenario could result from the diamond sector's underperformance, caused in turn by the external demand or terms of trade shock, for example.

Upside scenario

We could raise the ratings if economic growth or wealth levels in Botswana were to significantly increase beyond our expectations, supported by the diversification of Botswana's export base leading to greater economic resilience.

Table 11

Bulgaria (BBB/Positive/A-2)

• Analyst: gabriel.forss@spglobal.com
• Latest publication: Bulgaria 'BBB/A-2' Ratings Affirmed; Outlook Remains Positive, May 24, 2024

Rating score snapshot:

• Institutional assessment: 4
• Economic assessment: 4
• External assessment: 2
• Fiscal assessment – Flexibility and performance: 2
• Fiscal assessment – Debt burden: 1
• Monetary assessment: 5

Outlook: Positive

The positive outlook reflects our view that there is at least a one-in-three likelihood that Bulgaria will join the eurozone over the next 24 months.

Downside scenario

We could revise the outlook to stable if the prospect of Bulgaria joining the eurozone becomes less likely. This could occur if there is another lengthy period of political gridlock following the next general election--leading to the absence of a functioning government--or if, for example, inflationary pressures emerged again. This would imply a more permanent divergence of price dynamics between Bulgaria and other EU member states. External political considerations at the Eurogroup level could also delay its membership.

Upside scenario

We could raise the ratings over the next two years, potentially by several notches, if Bulgaria became a eurozone member. In our view, membership could improve Bulgaria's monetary policy effectiveness because it would exit the currently very constrained monetary policy regime implied by its currency board; it could also improve our view of risks to external liquidity. With or without eurozone accession, we could also raise the ratings if our view on the risks to Bulgaria's external liquidity improved.

Table 12

Burkina Faso (CCC+/Stable/C)

• Analyst: salvador.rodriguez@spglobal.com
• Latest publication: (Full Analysis) Burkina Faso, May 13, 2024

Rating score snapshot:

• Institutional assessment: 6
• Economic assessment: 6
• External assessment: 6
• Fiscal assessment – Flexibility and performance: 6
• Fiscal assessment – Debt burden: 4
• Monetary assessment: 5

Outlook: Stable

The stable outlook reflects the balance between the political, economic, and budgetary headwinds that Burkina Faso faces after its transition to military government amid a worsening security situation, against the country's membership of WAEMU, that provides an umbrella of support.

Downside scenario

We could lower the ratings if institutional instability leads to a slowdown of economic growth and weaker budgetary metrics, or if financial sanctions and economic deterioration lead to heightening roll-over risks for Burkina Faso's commercial debt in the next 12 months.

Upside scenario

We could raise the rating if political stability improves, with prospects of ECOWAS and/or WAEMU sanctions becoming more remote, allowing for a stronger-than-expected GDP growth, and budgetary consolidation path.

(Latest research update published on Nov. 11, 2022)

Table 13

Cameroon (B-/Stable/B)

• Analyst: sebastien.boreux@spglobal.com
• Latest publication: Raised To 'B-/B' On Lower Liquidity Tensions And Resilient Growth; Outlook Stable, March 22, 2024

Rating score snapshot:

• Institutional assessment: 6
• Economic assessment: 5
• External assessment: 5
• Fiscal assessment – Flexibility and performance: 3
• Fiscal assessment – Debt burden: 4
• Monetary assessment: 5

Outlook: Stable

The stable outlook balances risks arising from still-weak public finance management, volatile terms of trade, and the fragile security situation against factors such as access to concessional funding and the potential for stronger economic growth.

Downside scenario

We could lower the ratings on Cameroon in the next 12 months if government liquidity pressures were to build up--for example, as a result of declining oil prices, fiscal slippages, or governance gaps.

We could also lower the ratings if institutional stability were to deteriorate materially, particularly in the run-up to the 2025 presidential elections, which could impede policymaking and the capacity of the government to repay its commercial debt on time and in full.

Upside scenario

We could raise our ratings on Cameroon if the country's external position improves beyond our expectations, or if a stronger fiscal performance resulted in a steeper decline of net general government debt as a share of GDP. Any positive rating action would hinge on a material improvement in governance and public finance management.

Table 14

Cape Verde (B-/Stable/B)

• Analyst: ravi.bhatia@spglobal.com
• Latest publication: (Full Analysis) Cape Verde, Feb. 19, 2024

Rating score snapshot:

• Institutional assessment: 4
• Economic assessment: 5
• External assessment: 6
• Fiscal assessment – Flexibility and performance: 5
• Fiscal assessment – Debt burden: 6
• Monetary assessment: 5

Outlook: Stable

The stable outlook balances our expectation of a continued economic recovery alongside the availability of supportive foreign donors willing to provide grant and loan facilities over the next 12 months, against the risk of high global inflation pressures (which could reduce the spending power of tourists), and elevated fiscal risks given Cape Verde's very high stock of general government debt.

Downside scenario

We could lower the rating if fiscal outcomes substantially worsened relative to our current expectations. This could result, for example, if the tourism sector were to sharply contract over the forecast horizon through 2027. It could also be due to contingent liabilities stemming from SOEs or the private sector crystalizing on the government's balance sheet. The ratings could also come under pressure if the Cape Verde escudo's (CVE's) longstanding peg to the euro came into question, particularly given that most government debt is denominated in foreign currency.

Cape Verde is currently in discussions with a bilateral (non-commercial) creditor, Portugal, regarding relief on a portion of official debt. We could lower our ratings on Cape Verde if terms on commercial debt obligations were adversely affected, but this is not our base-case scenario.

Upside scenario

We could raise the rating if Cape Verde's balance-of-payment outcomes significantly strengthened and if budgetary performance improved, putting the government debt-to-GDP ratio on a faster downward path over the next two to three years.

(Latest research update published on Aug. 19, 2022)

Table 15

Cote d'Ivoire (BB-/Positive/B)

• Analyst: sebastien.boreux@spglobal.com
• Latest Publication: Cote d'Ivoire Outlook Revised To Positive On Declining Budgetary And External Imbalances; 'BB-/B' Ratings Affirmed, May 17, 2024

Rating score snapshot:

• Institutional assessment: 4
• Economic assessment: 4
• External assessment: 4
• Fiscal assessment – Flexibility and performance: 3
• Fiscal assessment – Debt burden: 5
• Monetary assessment: 5

Outlook: Stable

The positive outlook reflects our view that, over the next 24 months, rising commodities exports could result in a more significant decline in external and fiscal imbalances than in our base case. This could be accompanied by high economic growth, benefiting from economic reforms, donor support, and monetary and political stability.

Upside scenario

We could raise the ratings on Cote d'Ivoire if the country's external position improves more than we currently forecast, for example due to rising hydrocarbon and mining exports. We could also raise the ratings if the budgetary position improves faster than we currently expect or if we observe a material improvement in the regional central bank's capacity to conduct monetary policy and support macroeconomic stability. We expect any positive action to be contingent on political stability.

Downside scenario

We could revise the outlook to stable if external imbalances were to persist, and external leverage in relation to current account receipts (CAR) does not decline. We could also revise the outlook to stable if a pronounced rise in domestic political tensions durably hinders policymaking.

Table 18

Democratic Republic of Congo (B-/Stable/B)

• Analyst: mickael.vidal@spglobal.com
• Latest publication: (Full Analysis) Democratic Republic of Congo, Jan. 29, 2024

Rating score snapshot:

• Institutional assessment: 6
• Economic assessment: 6
• External assessment: 5
• Fiscal assessment – Flexibility and performance: 4
• Fiscal assessment – Debt burden: 1
• Monetary assessment: 6

Outlook: Stable

The stable outlook balances DRC's reasonably favorable economic prospects, donor support, and moderating external imbalances against its very low-income levels, high vulnerability to adverse commodity price swings given the reliance on the mining sector, and potential for a deterioration in the domestic political and security landscape over the next 12 months.

Downside scenario

We could lower the ratings on DRC if political stability were to deteriorate significantly or if the domestic security situation notably worsened. The ratings could also come under pressure if there were a protracted negative terms-of-trade shock, given the still-substantial reliance on the mining sector.

Upside scenario

We could upgrade DRC if the government implemented structural reforms, with economic and external performance strengthening beyond our projections, and at the same time we saw an improvement in domestic political stability and a sharp reduction in security risks.

(Latest research update published on Jan. 28, 2022)

Table 16

Congo-Brazzaville (B-/Stable/B)

• Analyst: hugo.soubrier@spglobal.com
• Latest publication: (Full Analysis) Congo-Brazzaville, Jan. 29, 2024

Rating score snapshot:

• Institutional assessment: 6
• Economic assessment: 6
• External assessment: 6
• Fiscal assessment – Flexibility and performance: 3
• Fiscal assessment – Debt burden: 6
• Monetary assessment: 5

Outlook: Stable

The outlook is stable because we believe decreasing external and fiscal pressure, thanks to ongoing reform and the support of official partners, should balance Congo-Brazzaville's high economic and fiscal risks and general government debt.

Downside scenario

We could lower the ratings if Congo-Brazzaville fails to provide full and timely payment to commercial lenders, or if economic growth is significantly weaker than our forecasts, for example, following lower oil production than targeted, or due to a sharp drop in oil prices, and impairs the country's ability to service its commercial debt.

Upside scenario

We could raise the ratings if Congo-Brazzaville strengthened its fiscal and external position significantly beyond our current expectations, and if institutional risks abate.

(Latest research update published on July 28, 2023)

Table 17

Croatia (BBB+/Positive/A-2)

• Analyst: gabriel.forss@spglobal.com
• Latest publication: (Full Analysis) Croatia, March 18, 2024

Rating score snapshot:

• Institutional assessment: 4
• Economic assessment: 4
• External assessment: 2
• Fiscal assessment – Flexibility and performance: 2
• Fiscal assessment – Debt burden: 2
• Monetary assessment: 3

Outlook: Positive

The positive outlook indicates that we could raise the ratings if Croatia achieves faster integration into the wealthier eurozone economy.

Downside scenario

We could revise the outlook to stable if Croatia's economic performance does not improve as expected. Such weakening could come about if the Russia-Ukraine conflict led to increasingly severe economic consequences across Europe or if inflationary conditions significantly worsened. Net emigration trends and an aging population also represent a long-term risk to Croatia's growth and public finances.

Upside scenario

We could raise the ratings over the next 12 months if Croatia's economic resilience is sustained, supported by the country's deepening integration with Europe, and facilitated institutional improvements, for example within the judiciary, education, and broader business environment.

(Latest research update published on Sept. 15, 2023)

Table 19

Egypt (B-/Positive/B)

• Analyst: ravi.bhatia@spglobal.com
• Latest publication: (Full Analysis) Egypt, April 22, 2024

Rating score snapshot:

• Institutional assessment: 5
• Economic assessment: 5
• External assessment: 5
• Fiscal assessment – Flexibility and performance: 6
• Fiscal assessment – Debt burden: 6
• Monetary assessment: 5

Outlook: Positive

The positive outlook reflects the potential for further improvements in Egypt's external position and alleviation of foreign currency shortages. It also reflects our view that the determination of the exchange rate by market forces will help spur GDP growth and over time, support the government's fiscal consolidation plan.

Downside scenario

We could revise the outlook to stable if the authorities' commitment to macroeconomic reform, including exchange rate flexibility, wanes, and economic imbalances, such as foreign currency shortages, build again.

We could also revise the outlook to stable if the government's elevated debt interest costs do not abate, increasing the risk of a distressed debt exchange.

Upside scenario

We could consider raising our ratings if Egypt's net government or external debt positions improve faster than we currently expect, perhaps via an accelerated pace of deleveraging or FDI supported by the planned sale of state assets.

We could also raise the ratings if the wider availability of foreign currency results in the reduction of foreign exchange restrictions.

(Latest research update published on March 20, 2024)

Table 20

Ethiopia (SD/SD)

• Analyst: giulia.filocca@spglobal.com
• Latest publication: (Full Analysis) Ethiopia, March 25, 2024

Rating score snapshot:

• Institutional assessment: 6
• Economic assessment: 6
• External assessment: 6
• Fiscal assessment – Flexibility and performance: 6
• Fiscal assessment – Debt burden: 5
• Monetary assessment: 6

Outlook:

SD' (selective default) ratings do not carry outlooks. These ratings express a condition--default--and not a forward-looking opinion of default probability.

The negative outlook on our 'CCC' long-term local currency sovereign rating reflects risks to commercial domestic debt repayments in the context of ongoing fiscal, external, and monetary pressures.

Downside scenario

We could lower the local currency rating should the government announce its intention to restructure or suspend debt service payments on domestic obligations, specifically treasury bills and bonds held by commercial banks.

Upside scenario

We could raise the foreign currency ratings from 'SD' following the acceptance of a restructuring deal by a large majority of private creditors. This restructuring could entail an extension of maturities or lowering of the coupon rate.

We could raise the local currency ratings if we perceived the likelihood of a distressed exchange of Ethiopia's local currency commercial debt had decreased. This could be the case if, for example, significant external donor support materializes, reducing the government's reliance on domestic markets to finance budget deficits.

(Latest research update published on Dec. 16, 2023)

Table 21

Georgia (BB/Stable/ B)

• Analyst: amr.abdullah@spglobal.com
• Latest publication: (Full Analysis) Georgia, Feb. 12, 2024

Rating score snapshot:

• Institutional assessment: 4
• Economic assessment: 4
• External assessment: 4
• Fiscal assessment – Flexibility and performance: 4
• Fiscal assessment – Debt burden: 3
• Monetary assessment: 4

Outlook: Stable

The stable outlook reflects Georgia's strong economic and fiscal outlook, which we expect to continue over the next year. This is counterbalanced by a weak external position and the risk that the unpredictability of some policymaking could undermine growth prospects. Heightened geopolitical tensions in the region, which we expect to remain over the next year, add to these challenges.

Downside scenario

Rating pressure could stem from a marked increase in domestic political tensions or backtracking on the reform agenda that dents investor sentiment and Georgia's growth prospects. Rating stress could also build in a scenario of reverse migration and capital outflows leading to pronounced deterioration of the fiscal and balance of payments outlook.

Upside scenario

We could take a positive rating action over the next 12 months if Georgia's fiscal performance was markedly stronger than we project, with balance of payments risks not increasing.

(Latest research update published on Dec. 8, 2023)

Table 22

Ghana (SD/SD)

• Analyst: frank.gill@spglobal.com
• Latest publication: (Full Analysis) Ghana, May 27, 2024

Rating score snapshot:

• Institutional assessment: 5
• Economic assessment: 5
• External assessment: 6
• Fiscal assessment – Flexibility and performance: 6
• Fiscal assessment – Debt burden: 6
• Monetary assessment: 5

Outlook:

The stable outlook on the long-term local currency rating reflects balanced risks to the sovereign's capacity to manage its domestic debt stock. Under the IMF ECF program, net domestic financing requirements are rapidly declining, given the moratorium on interest expenditure on foreign debt, and significant improvement in the underlying (primary) budgetary position. Reflecting low domestic savings, the depth of domestic capital markets remains limited, acting as a constraint on the Bank of Ghana's monetary flexibility.

The 'SD' (selective default) long-term foreign currency rating does not carry an outlook.

Downside scenario

Our long-term local currency rating on Ghana could come under downward pressure, should--contrary to our expectation---domestic borrowing requirements increase beyond the financing capacity of domestic capital markets, possibly due to an unexpected worsening of fiscal performance, or a rupture with key creditors including the IMF.

Upside scenario

Our ratings on Ghana could improve should authorities successfully agree upon a debt treatment with official and commercial creditors that reduces gross and net borrowing requirements materially, and improves the economy's external financing profile.

(Latest research update published on June 2, 2023)

Table 23

Hungary (BBB-/Stable/A-3)

• Analyst: gabriel.forss@spglobal.com
• Latest publication: Hungary 'BBB-/A-3' Ratings Affirmed; Outlook Stable, April 26, 2024

Rating score snapshot:

• Institutional assessment: 4
• Economic assessment: 3
• External assessment: 3
• Fiscal assessment – Flexibility and performance: 4
• Fiscal assessment – Debt burden: 4
• Monetary assessment: 4

Outlook: Stable

The stable outlook reflects our expectation that Hungary's economic recovery, ongoing disinflation, and falling interest rates will aid the government's fiscal consolidation efforts in the medium term, allowing the government debt burden to stabilize as a share of GDP.

Downside scenario

We could lower the ratings if Hungary's fiscal performance proved much weaker than we currently expect, as a result of insufficient policy efforts; weaker economic recovery; or external pressures, for example, triggered by substantial cuts to EU funds or by energy supply shocks.

Upside scenario

We could raise the ratings if Hungary's fiscal position improved significantly, alongside a reduction in its external vulnerabilities.

Table 24

Iraq (B-/Stable/B)

• Analyst: giulia.filocca@spglobal.com
• Latest publication: (Full Analysis) Iraq, Feb. 12, 2024

Rating score snapshot:

• Institutional assessment: 6
• Economic assessment: 6
• External assessment: 3
• Fiscal assessment – Flexibility and performance: 6
• Fiscal assessment – Debt burden: 4
• Monetary assessment: 6

Outlook: Stable

The stable outlook reflects our view that Iraq's FX reserves will continue to comfortably exceed debt-servicing obligations over the next 12 months. This largely offsets significant risks from the country's political uncertainty, weak institutional framework, and lack of economic diversification.

Downside scenario

Iraq's political landscape and external security backdrop remain unpredictable. We could consider a downgrade if we perceived that weaknesses in the sovereign's institutional framework had reduced the government's ability or willingness to service debt. We could also lower our ratings if pressure on Iraq's fiscal or external positions increased; for instance, due to a sharp and prolonged decline in oil prices or production.

Upside scenario

We could upgrade Iraq if higher-than-expected GDP growth, for example, from reinvigorated reconstruction efforts, boosted the country's real growth and GDP per capita, and supported fiscal and external metrics. Institutional reforms and a more stable security environment could also improve our opinion of the government's debt-servicing capacity.

(Latest research update published on Feb. 10, 2023)

Table 25

Israel (A+/Negative/A-1)

• Analyst: maxim.rybnikov@spglobal.com
• Latest Publication: (Full Analysis) Israel, May 13, 2024

Rating score snapshot:

• Institutional assessment: 4
• Economic assessment: 1
• External assessment: 1
• Fiscal assessment – Flexibility and performance: 4
• Fiscal assessment – Debt burden: 4
• Monetary assessment: 2

Outlook: Negative

The negative outlook reflects the risk that the Israel-Hamas war and the confrontation with Hezbollah could escalate or affect Israel's economic, fiscal, and balance-of-payments parameters more significantly than we currently expect.

Downside scenario

We could lower the ratings on Israel if the ongoing conflicts widen, further increasing the security and geopolitical risks that Israel faces. We could also lower the ratings in the next 12-24 months if the impact of the conflicts on Israel's economic growth, fiscal position, and balance of payments proves more significant than we currently project.

Upside scenario

We could revise the outlook to stable if we viewed the likelihood of military escalation as reduced and the broader security risks moderated.

(Latest research update published on April 19, 2024)

Table 26

Jordan (B+/Stable/B)

• Analyst: samuel.tilleray@spglobal.com
• Latest publication: Jordan 'B+/B' Ratings Affirmed; Outlook Remains Stable, March 8, 2024

Rating score snapshot:

• Institutional assessment: 4
• Economic assessment: 6
• External assessment: 5
• Fiscal assessment – Flexibility and performance: 3
• Fiscal assessment – Debt burden: 6
• Monetary assessment: 4

Outlook: Stable

The stable outlook reflects our expectation that the war between Israel and Hamas will not escalate beyond Gaza. We think Jordan will effectively leverage international support and has adequate domestic policy buffers to manage the conflict's impact on tourism and the broader economy.

Upside scenario

We could raise the ratings if Jordan's economic growth accelerated, leading to greater labor participation and higher GDP per capita. A higher rating is also likely to hinge on whether the government can place its net debt-to-GDP ratio on a clear downward path without markedly undermining growth.

Downside scenario

We could lower the ratings if the reform momentum stalled, undoing fiscal consolidation efforts, for instance due to rising domestic spending pressure. Rating pressure could also stem from a larger and more prolonged economic shock linked to the Israel-Hamas war. Additionally, a negative rating action could materialize if the currently strong bilateral and multilateral donor support unexpectedly diminished, causing external financing pressure.

Table 27

Kazakhstan (BBB-/Stable/A-3)

• Analyst: zahabia.gupta@spglobal.com
• Latest publication: Kazakhstan 'BBB-/A-3' Ratings Affirmed; Outlook Remains Stable, March 1, 2024

Rating score snapshot:

• Institutional assessment: 5
• Economic assessment: 4
• External assessment: 2
• Fiscal assessment – Flexibility and performance: 2
• Fiscal assessment – Debt burden: 2
• Monetary assessment: 4

Outlook: Stable

The stable outlook on the 'BBB-' long-term rating on Kazakhstan reflects our view that risks from weaker growth and relatively high external financing needs are mitigated by planned governance and economic reforms, as well as strong asset buffers.

Downside scenario

We could lower the rating if Kazakhstan's external position and fiscal deficits worsened beyond our current projections. This could be the case if imports continued to grow strongly or if the Caspian Pipeline Consortium (CPC) pipeline were incapacitated for an extended period and caused a pronounced decline in oil exports.

Upside scenario

We could raise the rating if we saw a track record of reforms resulting in accelerated non-oil growth and political stability, as well as an easing of geopolitical risks. Ratings upside would also hinge on an improvement in monetary policy effectiveness, as shown by a more robust monetary transmission mechanism, low inflation, and a continued commitment to exchange rate flexibility.

Table 28

Kenya (B/Negative/B)

• Analyst: giulia.filocca@spglobal.com
• Latest publication: (Full Analysis) Kenya, Feb. 26, 2024

Rating score snapshot:

• Institutional assessment: 4
• Economic assessment: 4
• External assessment: 6
• Fiscal assessment – Flexibility and performance: 6
• Fiscal assessment – Debt burden: 6
• Monetary assessment: 4

Outlook: Negative

The negative outlook reflects risks to Kenya's external debt- servicing capacity amid high external refinancing requirements. We also take into account tightened liquidity in the domestic capital markets, partly fueled by inflation and interest rate pressures.

Downside scenario

We could lower the ratings over the next six to 12 months if Kenya's external refinancing pressures mount, likely due to a sustained decline in FX reserves; or if we perceive any future debt-repurchase operations to be akin to a distressed exchange. We could also lower the ratings if we see limited progress on fiscal consolidation, further raising the government's already high debt and interest costs.

Upside scenario

We could revise the outlook to stable over the next six to 12 months if Kenya's external and domestic financing pressures are contained, and we see significant progress toward fiscal consolidation.

(Latest research update published on Feb. 9, 2024)

Table 29

Kuwait (A+/Stable /A-1)

• Analyst: ravi.bhatia@spglobal.com
• Latest publication: Kuwait Ratings Affirmed At 'A+'; Outlook Remains Stable, June 7, 2024

Rating score snapshot:

• Institutional assessment: 4
• Economic assessment: 3
• External assessment: 1
• Fiscal assessment – Flexibility and performance: 1
• Fiscal assessment – Debt burden: 1
• Monetary assessment: 4

Outlook: Stable

The stable outlook reflects our expectation that Kuwait's public and external balance sheets will remain very strong over the forecast horizon, backed by a significant stock of government financial assets. We expect these strengths to mitigate risks related to Kuwait's economic concentration on the oil sector and potential oil price volatility.

Downside scenario

We could lower our ratings on Kuwait if fiscal imbalances rise significantly, for instance due to weaker oil prices or the absence of fiscal reforms, and the government were to remain without comprehensive fiscal financing arrangements.

Upside scenario

We could raise the ratings if the government successfully implemented a comprehensive structural reform package, such as diversifying the economy away from the hydrocarbon sector and increasing its productive capacity, leading to stronger real GDP growth prospects.

Table 30

Lebanon (SD/SD)

• Analyst: juili.pargaonkar@spglobal.com
• Latest publication: Lebanon FC Ratings Affirmed At 'SD/SD' And LC Ratings At 'CC/C'; Outlook On Long-Term LC Rating Negative, Feb. 16, 2024

Rating score snapshot:

• Institutional assessment: 6
• Economic assessment: 6
• External assessment: 6
• Fiscal assessment – Flexibility and performance: 6
• Fiscal assessment – Debt burden: 6
• Monetary assessment: 6

Outlook:

Foreign currency rating.  The Lebanese government defaulted on its foreign currency debt obligations in March 2020. Our foreign currency rating on Lebanon is 'SD'. We do not assign outlooks to 'SD' or 'D' (default) ratings because they express a condition and not a forward-looking opinion of default probability.

We would raise our long-term foreign currency rating from 'SD' upon completion of the government's commercial debt restructuring. The future rating would reflect Lebanon's post-restructuring creditworthiness, considering the resulting debt burden and economic policy prospects.

Local currency rating.  The negative outlook on the 'CC' long-term local currency rating reflects our view that the government could ultimately restructure its local currency debt as part of a broader program. The outlook also reflects that further weakening of public sector administrative capacity could, in our opinion, present risks to timely debt service.

Downside scenario

We could lower the local currency rating to 'SD' if a debt restructuring program includes haircuts or maturity extensions on local currency debt. We could also lower the local currency rating to 'SD' if the government missed local currency principal or interest payments to a commercial creditor, for instance due to administrative constraints. Although this is not our baseline scenario, we believe the latter remains a possibility given the large-scale and lingering domestic political instability in Lebanon.

Upside scenario

We could revise the outlook to stable or raise the local currency rating if we perceive that the likelihood of a distressed exchange of Lebanon's local currency commercial debt has decreased while domestic economic policymaking strengthened.

Table 31

Madagascar (B-/Stable/B)

• Analyst: sebastien.boreux@spglobal.com
• Latest publication: (Full Analysis) Madagascar, April 8, 2024

Rating score snapshot:

• Institutional assessment: 5
• Economic assessment: 6
• External assessment: 5
• Fiscal assessment – Flexibility and performance: 6
• Fiscal assessment – Debt burden: 3
• Monetary assessment: 4

Outlook: Stable

The stable outlook reflects Madagascar's relatively solid economic growth prospects, improving budgetary position, and ongoing engagement with international donors, which we expect will support gradual reform implementation. On the negative side, we see high pressure from ailing SOEs, a stifled business environment, and vulnerability to climate-related disasters, such as drought, flooding, and cyclones.

Downside scenario

We could lower the ratings if the budgetary position deteriorates materially, including from a crystallization of contingent liabilities on the government's balance sheet, leading to liquidity tensions.

In addition, although this is not our base-case scenario, a significant deterioration in the country's political stability could impair its ability to service debt and negatively affect our assessment of the sovereign's creditworthiness.

Upside scenario

We could raise the ratings if the country's external position improves, for example due to rising export activity, thanks to higher mining output or a boost from export-oriented sectors on the back of investment in transport infrastructure, energy, and improving the business environment.

We could also raise our ratings on Madagascar in case of faster budgetary consolidation than we currently expect, supported by a meaningful increase in government revenues.

(Latest research update published on April 11, 2023)

Table 32

Mauritius (BBB-/Stable/A-3)

• Analyst: remy.carasse@spglobal.com
• Latest publication: (Full Analysis) Mauritius, Jan. 22, 2024

Rating score snapshot:

• Institutional assessment: 3
• Economic assessment: 3
• External assessment: 3
• Fiscal assessment – Flexibility and performance: 3
• Fiscal assessment – Debt burden: 5
• Monetary assessment: 5

Outlook: Stable

The stable outlook on Mauritius reflects our expectation that budgetary and external pressures will ease thanks to strong economic growth.

Downside scenario

We could lower our sovereign credit rating on Mauritius if real GDP per capita growth turns out to be significantly weaker than we expect, or if net government debt to GDP does not remain on a downward path.

Upside scenario

We could raise our rating on Mauritius if budgetary consolidation turns out to be significantly faster than we expect, coupled with lower government interest expenditure relative to government revenue, while maintaining strong real GDP per capita growth.

(Latest research update published on July 21, 2023)

Table 33

Montenegro (B/Positive/B)

• Analyst: amr.abdullah@spglobal.com
• Latest publication: Montenegro Outlook Revised To Positive On Resilient Growth And Potential Stronger Fiscal Performance; Affirmed At 'B/B', March 1, 2024

Rating score snapshot:

• Institutional assessment: 4
• Economic assessment: 4
• External assessment: 6
• Fiscal assessment – Flexibility and performance: 4
• Fiscal assessment – Debt burden: 4
• Monetary assessment: 6

Outlook: Positive

The positive outlook primarily reflects the potential for Montenegro's fiscal and balance-of-payments performance to prove stronger than we currently forecast over the next year, further reducing the level of net general government debt as a share of the economy following an already consistent decline over 2021-2023.

Upside scenario

We could raise our ratings on Montenegro in the next 12 months if its fiscal performance proves stronger than we currently forecast, continuing the downward trend in net general government debt. This could be the case as a result of stronger economic growth or fiscal consolidation measures adopted by the authorities. We could also raise the ratings if Montenegro's external position strengthens beyond our current base-case forecast.

Downside scenario

We may revise the outlook to stable or lower the ratings in the next 12 months if Montenegro's fiscal performance proves materially weaker than we expect. For instance, this could happen if additional debt-financed infrastructure projects led to a sharp increase in public debt, eroding Montenegro's fiscal headroom.

Table 34

Morocco (BB+/Positive/B)

• Analyst: remy.carasse@spglobal.com
• Latest publication: Morocco Outlook Revised To Positive On Improving Socioeconomic And Budgetary Reform Trajectory; 'BB+/B' Ratings Affirmed, March 29, 2024

Rating score snapshot:

• Institutional assessment: 4
• Economic assessment: 5
• External assessment: 2
• Fiscal assessment – Flexibility and performance: 3
• Fiscal assessment – Debt burden: 4
• Monetary assessment: 3

Outlook: Positive

The positive outlook reflects our expectations that Morocco will build on its recent track record of implementing socioeconomic and budgetary reforms, paving the way for stronger and more inclusive growth, and a reduction in budget deficits.

Upside scenario

We could raise our ratings on Morocco within the next 12-18 months if the government continues to implement structural reforms, resulting in stronger economic growth and a broadening of the tax base, while budget deficits continue to decline.

Downside scenario

We could revise the outlook to stable if economic growth, budgetary consolidation, or the reform momentum prove weaker than we currently expect.

Table 35

Mozambique (CCC+/Stable/C)

• Analyst: leon.bezuidenhout@spglobal.com
• Latest publication: Mozambique Ratings Affirmed At 'CCC+/C'; Outlook Stable, April 19, 2024

Rating score snapshot:

• Institutional assessment: 6
• Economic assessment: 6
• External assessment: 6
• Fiscal assessment – Flexibility and performance: 6
• Fiscal assessment – Debt burden: 6
• Monetary assessment: 5

Outlook: Stable

The stable outlook reflects the balance between the lingering administrative shortcomings in Mozambique's debt management and ongoing liquidity pressures against the more favorable medium-term growth prospects--driven by several major liquefied natural gas (LNG) projects--and reform plans that are supported by policies under an IMF program.

Downside scenario

We could lower the LC ratings over the next 12 months if we assess that further delays on LC debt payments constitute a selective default (SD) according to our definition (see "S&P Global Ratings Definitions," published June 9, 2023, on RatingDirect). We could also lower the LC and FC ratings if we assess that the government's liquidity position is deteriorating further--as evidenced, for example, by the continued drawdown of liquid assets or further accumulation of arrears to creditors and suppliers--or if additional economic or external shocks or further delays to the large gas projects are likely to make the government less willing or able to service its commercial debt obligations in a timely manner.

Upside scenario

We could raise the ratings if we were to expect government revenue to increase materially, perhaps due to a sharp rise in gas production, reducing the risk of further delayed payments to creditors or a distressed restructuring of Mozambique's 2031 Eurobond.

Table 36

Nigeria (B-/Stable/B)

• Analyst: benjamin.young@spglobal.com
• Latest publication: Nigeria Ratings Affirmed At 'B-/B'; Outlook Remains Stable, Feb. 2, 2024

Rating score snapshot:

• Institutional assessment: 5
• Economic assessment: 6
• External assessment: 6
• Fiscal assessment – Flexibility and performance: 6
• Fiscal assessment – Debt burden: 5
• Monetary assessment: 5

Outlook: Stable

The stable outlook balances the government's capacity to continue the reform agenda, which, if delivered, should support growth and fiscal outcomes, against below-potential oil production and risks to macroeconomic stability and confidence from inflationary pressures and a volatile currency.

Downside scenario

We could lower the ratings over the next 12 months if we see increasing risks to Nigeria's capacity to repay commercial obligations. This could arise, for instance, from significantly reduced usable foreign currency (FX) reserves, much higher fiscal deficits or debt-servicing needs, or because domestic financial markets are unwilling to absorb additional local currency debt issuance.

Upside scenario

We could raise our ratings over the next 12 months if Nigeria's economic performance significantly exceeds our forecasts, and fiscal and external imbalances improve significantly.

Table 37

North Macedonia (BB-/Stable/B)

• Analyst: amr.abdullah@spglobal.com
• Latest publication: (Full Analysis) North Macedonia, Jan. 29, 2024

Rating score snapshot:

• Institutional assessment: 5
• Economic assessment: 4
• External assessment: 4
• Fiscal assessment – Flexibility and performance: 4
• Fiscal assessment – Debt burden: 3
• Monetary assessment: 4

Outlook: Stable

The stable outlook reflects our assessment that although North Macedonia faces challenges such as subdued growth in its trading partners and the lingering effects of the war in Ukraine, these factors are offset by the country's growth potential, moderate government debt, and controlled interest expenses.

Downside scenario

We could lower the ratings if the country's fiscal or external metrics significantly deteriorate, or we see a depletion of its foreign exchange reserves that pressures the de facto peg to the euro. Furthermore, downward pressure on the ratings would rise if budget deficits worsen substantially beyond our medium-term projections. This would be especially pertinent if there were a sharp increase in government debt.

Upside scenario

We could raise the ratings if the country shows strong progress in implementing structural reforms, leading to an enhanced institutional framework. Additionally, positive triggers for an upgrade would include improved fiscal performance with a decreasing trend in net general government debt, as well as strong economic growth.

(Latest research update published on July 28, 2023)

Table 38

Oman (BB+/Positive/B)

• Analyst: benjamin.young@spglobal.com
• Latest publication: Oman Outlook Revised To Positive On Strengthening Fiscal Position; 'BB+/B' Ratings Affirmed, March 29, 2024

Rating score snapshot:

• Institutional assessment: 4
• Economic assessment: 4
• External assessment: 4
• Fiscal assessment – Flexibility and performance: 1
• Fiscal assessment – Debt burden: 3
• Monetary assessment: 4

Outlook: Positive

The positive outlook reflects our view that the government's balance sheet will strengthen and the economic reform program could lead to faster-than-expected deleveraging in many state-owned enterprises, without dampening economic growth outcomes. This would strengthen the economy's resilience to adverse oil price shocks.

Upside scenario

We could raise the ratings over the next 18 months if Oman's fiscal position strengthens further--for instance from a continued reduction in government debt--and the state-owned enterprise sector continues deleveraging. A stronger economic growth trajectory could also contribute to an upgrade.

Downside scenario

We could revise the outlook to stable if fiscal and economic reform implementation slows, or if we were to expect a sustained period of less favorable terms of trade to result in budget deficits or a worse external position compared with our current forecasts.

Table 39

Poland (A-/Stable/A-2)

• Analyst: ludwig.heinz@spglobal.com
• Latest publication: Poland 'A-/A-2' Foreign Currency Ratings Affirmed; Outlook Stable, May 10, 2024

Rating score snapshot:

• Institutional assessment: 4
• Economic assessment: 3
• External assessment: 2
• Fiscal assessment – Flexibility and performance: 4
• Fiscal assessment – Debt burden: 3
• Monetary assessment: 2

Outlook: Stable

The stable outlook reflects the balance between Poland's robust medium-term growth prospects and improved relations with the EU, and the near-term risks it faces from subdued external demand, loose fiscal policy, and elevated underlying price pressures.

Upside scenario

We could raise the ratings if we observed sustained institutional and governance improvements that also translated into a steady flow of EU funds and net foreign direct investment (FDI), supporting Poland's medium-term growth prospects. We could also raise the ratings if fiscal balances improved well beyond our expectations.

Downside scenario

We could lower the ratings if Poland's medium-term growth prospects deteriorated significantly, possibly coupled with renewed external shocks, including potentially unexpected spillovers and reduced confidence linked to the Russia-Ukraine war.

Table 40

Qatar (AA/Stable/A-1+)

• Analyst: juili.pargaonkar@spglobal.com
• Latest publication: (Full Analysis) Qatar, May 6, 2024

Rating score snapshot:

• Institutional assessment: 4
• Economic assessment: 1
• External assessment: 3
• Fiscal assessment – Flexibility and performance: 1
• Fiscal assessment – Debt burden: 1
• Monetary assessment: 4

Outlook: Stable

The stable outlook reflects our view that Qatar's fiscal and external buffers should continue to benefit from the country's status as one of the world's largest exporters of LNG over the next two years, further boosted by production increases through the NFE over 2026-2030.

Downside scenario

We could lower the ratings should Qatar experience a significant external shock, for example due to an unanticipated disruption to key export routes as a result of regional geopolitical developments, or perhaps due to a material worsening of its terms of trade, which, among other things, could reduce our estimate of government liquid assets below 100% of GDP.

Upside scenario

We could consider raising the ratings if risks related to Qatar's external position reduced, including a decline in the country's external funding needs, alongside a significant improvement in data transparency, for example, via the provision of full international investment position data, including information on the government's external assets.

(Latest research update published on Nov. 4, 2022)

Table 41

Ras al Khaimah (A-/Positive/A-2)

• Analyst: juili.pargaonkar@spglobal.com
• Latest publication: (Full Analysis) Ras Al Khaimah, May 27, 2024

Rating score snapshot:

• Institutional assessment: 4
• Economic assessment: 3
• External assessment: 2
• Fiscal assessment – Flexibility and performance: 1
• Fiscal assessment – Debt burden: 1
• Monetary assessment: 5

Outlook: Positive

The positive outlook reflects our view that RAK's economy could grow beyond our expectations on planned construction projects in the emirate and the spillover effects on RAK's mining sector from investment spending in the UAE, the rest of the GCC, and the Indian subcontinent.

Downside scenario

We could revise the outlook to stable if the government's fiscal position materially deteriorates. This could happen, for instance, if RAK incurred significant debt to fund capital projects. We currently expect these to be predominantly financed via budgetary headroom and land sales. We could also lower the ratings if debt-service costs significantly increase.

Upside scenario

We could raise the ratings over the next two years if RAK's economic prospects strengthen, underpinning higher GDP per capita income levels, while its fiscal performance remains strong.

(Latest research update published on Oct. 13, 2023)

Table 42

Romania (BBB-/Stable/A-3)

• Analyst: niklas.steinert@spglobal.com
• Latest publication: Romania 'BBB-/A-3' Ratings Affirmed; Outlook Stable, April 12, 2024

Rating score snapshot:

• Institutional assessment: 4
• Economic assessment: 3
• External assessment: 3
• Fiscal assessment – Flexibility and performance: 5
• Fiscal assessment – Debt burden: 4
• Monetary assessment: 3

Outlook: Stable

The stable outlook balances our view of the country's high twin deficits against the buffers provided by its moderate stock of external and government debt and its solid growth outlook over the next two years. We anticipate that Romania's commitments under the EU's Recovery and Resilience Facility (RRF) will continue to anchor the authorities' political reforms.

Downside scenario

We could lower the rating if government deficits and public debt levels exceeded our current projections, for instance as a result of lower economic growth.

Upside scenario

We could raise the rating if Romania's fiscal deficits narrowed substantially and government debt, as a share of GDP, declined. This could improve the government's debt profile and reduce its financing costs. We could also raise the ratings if external deficits narrowed more strongly than we anticipate.

Table 43

Rwanda (B+/Stable/B)

• Analyst: leon.bezuidenhout@spglobal.com
• Latest publication: (Full Analysis) Rwanda, Jan. 29, 2024

Rating score snapshot:

• Institutional assessment: 4
• Economic assessment: 5
• External assessment: 5
• Fiscal assessment – Flexibility and performance: 6
• Fiscal assessment – Debt burden: 4
• Monetary assessment: 4

Outlook: Stable

The stable outlook balances the risks posed by global economic headwinds and regional tensions, against the reduction in fiscal and external risks due to favorable domestic growth, improving public debt metrics, and continued access to low-cost, concessional financing.

Downside scenario

We may lower the rating over the next 12 months if government debt rises significantly above our expectations and available concessional financing is insufficient to cover it. We could also lower the rating if Rwanda's economic growth moderates, its policy options weaken, or regional tensions escalate to a degree that they disrupt growth and weaken its fiscal and external metrics.

Upside scenario

We could raise our rating on Rwanda if its fiscal and external debt metrics improve significantly more than we expect, underpinned by robust and sustainable economic growth combined with persistently lower inflation.

(Latest research update published on Jan. 27, 2023)

Table 44

Saudi Arabia (A/Stable/A-1)

• Analyst: zahabia.gupta@spglobal.com
• Latest publication: Saudi Arabia 'A/A-1' Ratings Affirmed; Outlook Stable, March 15, 2024

Rating score snapshot:

• Institutional assessment: 4
• Economic assessment: 3
• External assessment: 1
• Fiscal assessment – Flexibility and performance: 2
• Fiscal assessment – Debt burden: 1
• Monetary assessment: 4

Outlook: Stable

The stable outlook reflects that we expect the government's wide-ranging reforms will continue to underpin the development of the non-oil sector and support non-oil growth and fiscal receipts. This is balanced against the cyclicality of a still hydrocarbon-focused economy, and fiscal pressures tied to the country's transformation plan and expanding population.

Upside scenario

We could raise the ratings if economic reforms drive steady growth in GDP per capita and if the gradual deterioration in net government assets is lower than we currently expect. Furthermore, measures to strengthen institutions that, for example, support the development of domestic capital markets and improve data transparency, could be positive for the ratings.

Downside scenario

We could lower the ratings if we observed significant fiscal weakening, demonstrated by an erosion of the government's net-asset position beyond our expectations, or if real per capita GDP growth were to fall sharply on a sustained basis. A sustained rise in domestic or regional instability could also weigh on the ratings.

Table 45

Senegal (B+/Stable/B)

• Analyst: etienne.polle@spglobal.com
• Latest publication: Senegal 'B+/B' Ratings Affirmed; Outlook Stable, June 2, 2024

Rating score snapshot:

• Institutional assessment: 4
• Economic assessment: 4
• External assessment: 5
• Fiscal assessment – Flexibility and performance: 5
• Fiscal assessment – Debt burden: 5
• Monetary assessment: 5

Outlook: Stable

The stable outlook reflects the balance between Senegal's solid medium-term growth and fiscal prospects against potential economic and fiscal fallout in the event of protracted sociopolitical tensions.

Downside scenario

We could lower our ratings on the sovereign if persistent political tensions were to meaningfully hinder the authorities' capacity to implement reforms, constrain access to financing, and durably weigh on economic activity and fiscal outcomes.

Upside scenario

We could raise the ratings on Senegal over the next 12 months should fiscal and external metrics improve faster than we project, and if domestic tensions ease sustainably. The government's tax base expansion could result in a more significant decline in net government borrowing requirements and public debt relative to GDP, supported by strong economic growth, under an upgrade scenario.

Table 46

Serbia (BB+/Positive /B)

• Analyst: amr.abdullah@spglobal.com
• Latest publication: Serbia Outlook Revised To Positive On Improving Fiscal And External Profile; 'BB+/B' Ratings Affirmed, April 05, 2024

Rating score snapshot:

• Institutional assessment: 4
• Economic assessment: 4
• External assessment: 4
• Fiscal assessment – Flexibility and performance: 3
• Fiscal assessment – Debt burden: 2
• Monetary assessment: 4

Outlook: Positive

The positive outlook reflects Serbia's strong macroeconomic outcomes in 2023 and the possible further improvements in its external and fiscal performance.

Upside scenario

We could consider an upgrade in the next 12 months should Serbia's external position improve beyond our expectations on the back of stronger exports or net foreign direct investment (FDI) inflows. Additionally, stronger fiscal performance that helps lower net government debt could also lead to an upgrade.

Downside scenario

We might revise the outlook to stable if an economic slowdown in Serbia's key EU trading partners, potential energy supply shocks, or elevated geopolitical tensions markedly weakened Serbia's growth momentum and weighed on its fiscal and balance of payments positions.

Table 47

Sharjah (BBB-/Stable/A-3)

• Analyst: juili.pargaonkar@spglobal.com
• Latest publication: Emirate of Sharjah 'BBB-/A-3' Ratings Affirmed; Outlook Stable, May 17, 2024

Rating score snapshot:

• Institutional assessment: 4
• Economic assessment: 3
• External assessment: 2
• Fiscal assessment – Flexibility and performance: 6
• Fiscal assessment – Debt burden: 5
• Monetary assessment: 5

Outlook: Stable

The stable outlook reflects our view that Sharjah's government will introduce sufficient measures to begin stabilizing its net general government debt as a percentage of GDP over the next two years.

Downside scenario

We could lower the ratings if net general government debt continued to rise, for example due to delays in implementing the fiscal consolidation plan or weaker economic growth. This could then further increase the government's already high debt-service costs.

Upside scenario

We could raise our ratings if Sharjah's fiscal performance materially strengthened, putting net general government debt on a downward path. This could happen due to additional expenditure-side consolidation measures or a further broadening of Sharjah's revenue base.

Table 48

St. Helena (BBB-/Stable/A-3)

• Analyst: leon.bezuidenhout@spglobal.com
• Latest publication: (Full Analysis) St. Helena, March 25, 2024

Rating score snapshot:

• Institutional assessment: 3
• Economic assessment: 5
• External assessment: 4
• Fiscal assessment – Flexibility and performance: 3
• Fiscal assessment – Debt burden: 1
• Monetary assessment: 5

Outlook: Stable

The stable outlook reflects the balance between S&P Global Ratings' expectation of strong and ongoing support for St. Helena from the U.K. government, and St. Helena's small, narrow economy and the effects of global inflationary pressures.

Downside scenario

We could lower the ratings if financial support from the U.K. (unsolicited; AA/Stable/A-1+) were to diminish over an extended period, and St. Helena's tax revenue were insufficient to compensate for this, or if the U.K.'s external position were to deteriorate more than we expect. We could also lower the ratings if another pandemic, or a natural disaster, had a severe or long-term impact on St. Helena's economy.

Upside scenario

We could raise the ratings if St. Helena's economic growth accelerated significantly faster than we forecast, and tax collection rose markedly.

(Latest research update published on March 31, 2023)

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South Africa (BB-/Stable/B)

• Analyst: zahabia.gupta@spglobal.com
• Latest publication: (Full Analysis) South Africa, May 20, 2024

Rating score snapshot:

• Institutional assessment: 4
• Economic assessment: 5
• External assessment: 2
• Fiscal assessment – Flexibility and performance: 6
• Fiscal assessment – Debt burden: 6
• Monetary assessment: 2

Outlook: Stable

The stable outlooks on the foreign and local currency sovereign ratings balances South Africa's credit strengths--in particular a credible central bank, a flexible exchange rate, an actively traded currency, and deep capital markets--against infrastructure-related pressures on growth and risks to the fiscal and debt position.

Downside scenario

We could lower the ratings if ongoing economic and governance reforms do not progress as planned, resulting in a further deterioration in economic growth or higher-than-expected fiscal financing needs. This could, for example, result from a worsening of critical infrastructure constraints.

Upside scenario

We could raise the ratings with an improving track record of effective reforms, resulting in a structural strengthening of economic growth and reduced levels of public debt and contingent liabilities.

(Latest research update published on Nov. 17, 2023)

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Tajikistan (B-/Stable/B)

• Analyst: giulia.filocca@spglobal.com
• Latest publication: Tajikistan 'B-/B' Ratings Affirmed; Outlook Stable, Feb. 16, 2024

Rating score snapshot:

• Institutional assessment: 5
• Economic assessment: 6
• External assessment: 3
• Fiscal assessment – Flexibility and performance: 5
• Fiscal assessment – Debt burden: 5
• Monetary assessment: 5

Outlook: Stable

The stable outlook reflects our expectation that Tajikistan will sustain moderate debt-service needs over the next 12 months. This stems from the still-high component of concessional borrowing in the government's debt stock that helps offset risks from the country's structurally volatile external position.

Downside scenario

We could lower the rating if Tajikistan's external debt levels increase sharply or if geopolitical risks escalate, resulting in pronounced pressure on its exchange rate and foreign currency reserves. We could also lower the rating if Tajikistan's government debt-servicing capacity becomes strained, for example, because of reduced access to concessional funding.

Upside scenario

We could consider an upgrade if we observed structural improvements in Tajikistan's economic position, ultimately lifting the country's income levels, without creating external and fiscal imbalances. A reduction in the government's debt interest costs or sustained decrease in the fiscal risks associated with state-owned enterprises (SOEs) could also support creditworthiness.

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Togo (B/Stable/B)

• Analyst: hugo.soubrier@spglobal.com
• Latest publication: (Full Analysis) Togo, March 18, 2024

Rating score snapshot:

• Institutional assessment: 5
• Economic assessment: 6
• External assessment: 6
• Fiscal assessment – Flexibility and performance: 4
• Fiscal assessment – Debt burden: 4
• Monetary assessment: 5

Outlook: Stable

The stable outlook on Togo, a member of WAEMU, reflects our expectation that the government's ongoing implementation of structural reforms will gradually improve the country's economic and fiscal performance and help counterbalance budgetary pressures.

Downside scenario

We could lower our ratings on Togo if institutional and security risks increase materially, or if access to regional and external financing deteriorates. We could also take this action if we see heightened pressure on WAEMU's international reserves and on the West African CFA franc (XOF)-to-euro exchange rate.

Upside scenario

Ratings upside could arise if Togo's economic growth is significantly stronger than we forecast, and its external and budgetary deficits and net government debt as a share of GDP decrease materially.

(Latest research update published on March 17, 2023)

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Turkiye (B+/Positive/B)

• Analyst: frank.gill@spglobal.com
• Latest publication: Turkiye Upgraded To 'B+' On Economic Rebalancing; Outlook Positive, May 3, 2024

Rating score snapshot:

- Institutional assessment: 4

- Economic assessment: 4

- External assessment: 5

- Fiscal assessment – Flexibility and performance: 5

- Fiscal assessment – Debt burden: 5

- Monetary assessment: 5

Outlook: Positive

We could raise the rating further should balance-of-payments outcomes continue to improve, inflation decline, and domestic savings in Turkish lira rise, leading to a rebuilding of the government's usable foreign currency reserves (gross reserves minus foreign currency borrowed from domestic residents).

Downside scenario

We could revise the outlook to stable if pressures on Turkiye's financial stability or wider public finances were to intensify, potentially in connection with unabated currency depreciation alongside a reversal of anti-inflationary policies.

Upside scenario

Should policymakers succeed in bringing down inflation and restoring confidence in the lira, amid narrowing current account deficits and a reversal of dollarization, we could raise our sovereign rating on Turkiye.

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Uganda (B-/Stable/B)

• Analyst: leon.bezuidenhout@spglobal.com
• Latest publication: Uganda 'B-/B' Ratings Affirmed; Outlook Remains Stable, May 31, 2024

Rating score snapshot:

• Institutional assessment: 5
• Economic assessment: 6
• External assessment: 6
• Fiscal assessment – Flexibility and performance: 6
• Fiscal assessment – Debt burden: 6
• Monetary assessment: 4

Outlook: Stable

The stable outlook balances Uganda's sizable fiscal and external deficits, which raise the sovereign's vulnerability to challenging domestic and external financing conditions, against medium-term growth potential stemming from large oil projects.

Downside scenario

We could lower our ratings on Uganda should domestic and external financing conditions worsen further, heightening funding pressure. This could occur if the financing capacity of Uganda's financial system becomes strained or if there is a lack of demand for government security issuances. We would see additional pressure on the ratings if we perceived future bond conversions or liability management operations for commercial debt to be akin to a distressed exchange.

Upside scenario

We could raise the ratings if a strong economic recovery or fiscal consolidation measures materially reduce the government's financing and debt servicing needs. We could also raise the ratings if oil exports, and associated fiscal revenue, substantially improve government finances.

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Ukraine (CC/Negative/C)

• Analyst: karen.vartapetov@spglobal.com
• Latest publication: Ukraine FC Rating Lowered To 'CC' With Negative Outlook On Expected Debt Restructuring; 'CCC+/C' LC Ratings Affirmed, March 8, 2024

Rating score snapshot:

• Institutional assessment: 5
• Economic assessment: 5
• External assessment: 6
• Fiscal assessment – Flexibility and performance: 6
• Fiscal assessment – Debt burden: 6
• Monetary assessment: 6

Outlook: Negative

The negative outlook on the FC long-term rating reflects risks to Ukraine's commercial debt service, given the government's debt-restructuring plan.

The stable outlook on the LC long-term ratings balances significant fiscal pressures against the government's incentives to service hryvnia-denominated debt to avoid distress to domestic banks, which are the primary holders of LC bonds issued by the government.

Downside scenario

We would lower the FC rating to 'SD' (selective default) if Ukraine implements what we view as a distressed debt restructuring. We could lower the LC ratings if we see indications that Ukrainian-hryvnia-denominated obligations could suffer nonpayment or restructuring.

Upside scenario

We could raise the FC ratings if, contrary to our expectations, we think the likelihood of a distressed exchange of Ukraine's commercial debt has decreased.

We could raise the LC ratings if Ukraine's security environment and medium-term macroeconomic outlook improve.

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Uzbekistan (BB-/Stable/B)

• Analyst: zahabia.gupta@spglobal.com
• Latest publication: Uzbekistan 'BB-/B' Ratings Affirmed; Outlook Stable, May 31, 2024

Rating score snapshot:

• Institutional assessment: 5
• Economic assessment: 5
• External assessment: 3
• Fiscal assessment – Flexibility and performance: 6
• Fiscal assessment – Debt burden: 2
• Monetary assessment: 4

Outlook: Stable

The stable outlook considers Uzbekistan's favorable growth prospects over the next 12 months and risks from increasing external and net general government debt, albeit from moderate levels.

Downside scenario

We could lower the ratings if external and government debt continue to increase rapidly, raising fiscal and balance of payments risks, especially if the anticipated benefits from related projects do not materialize as planned.

Upside scenario

We could raise the ratings if reforms lead to stronger-than-expected medium-term growth potential, with positive spillover effects for the fiscal and external positions.

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Zambia (SD/SD)

• Analyst: leon.bezuidenhout@spglobal.com
• Latest publication: Zambia FC Rating Affirmed At 'SD'; LC Rating At 'CCC+'; 'CCC+' Rating Assigned To New Amortizing Bonds, June 17, 2024

Rating score snapshot:

• Institutional assessment: 6
• Economic assessment: 6
• External assessment: 6
• Fiscal assessment – Flexibility and performance: 6
• Fiscal assessment – Debt burden: 6
• Monetary assessment: 5

Outlook

Local currency rating.  The stable outlook on the local currency sovereign credit rating reflects Zambia's gradually improving fiscal performance and the increasing availability of official support, balanced against risks from still-elevated near-term borrowing requirements and constrained financing options.

Foreign currency rating.  Our long-term foreign currency rating on Zambia is 'SD'. We do not assign outlooks to 'SD' (selective default) ratings because they express a condition and not a forward-looking opinion of default probability.

We do not assign outlooks to issue ratings.

Downside scenario

Local currency rating. We could lower the local currency rating over the next 12 months if significant funding pressures emerged, for instance because of wider fiscal deficits or reduced domestic market capacity to absorb additional government borrowing.

Upside scenario

Local currency rating.  We could raise the local currency ratings if Zambia's growth outlook strengthened, fiscal imbalances moderated, and financing options widened.

Foreign currency rating.  We will likely raise our foreign currency ratings from 'SD' once Zambia completes its debt restructuring with a significant majority of commercial creditors, including the majority of its commercial bank loans. The subsequent ratings would reflect Zambia's post-restructuring creditworthiness, factoring in its resulting debt burden and its macroeconomic prospects.

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