This report does not constitute a rating action.
Key Takeaways
- EMEA emerging markets enter 2025 with a positive outlook bias after 12 upgrades and four downgrades in 2024. The region constitutes 55 of S&P Global Ratings' 139 rated sovereigns and accounted for about 60% of upgrades globally in 2024.
- Headwinds from geopolitical risks persist.
- A stronger dollar, rising global protectionism, and an uncertain outlook for Chinese economic growth are key risks for all emerging markets including those in EMEA.
- The average rating in the region will likely remain below pre-pandemic levels over 2025. This also reflects the increasing share of frontier sovereigns in our ratings.
- Negative rating actions and outlooks mainly reflect worsening fiscal imbalances, often connected with strained institutional credibility or military conflicts.
EMEA emerging market sovereigns have retained positive rating and outlook momentum despite persistent headwinds from geopolitical risks. Considering seven positive outlooks and only two negative outlooks as of year-end 2024, we think creditworthiness could strengthen further over 2025, albeit from historically weak levels.
The economic diversity of the region--which spans Europe, the Middle East, Central Asia, North Africa, and Sub-Saharan Africa--and emerging idiosyncratic strengths continue to provide scope for diverse credit movements. At the same time, the Russia-Ukraine war grinds on, while the Israel-Hamas-Hezbollah conflict and recent events in Syria pose wider risks to the Middle East, as well as to global energy and shipping markets. Despite the destruction of human and physical capital due to the conflicts, their effects on sovereign creditworthiness have mainly been confined to countries that are directly involved, not least Ukraine and Israel.
Despite the risks, policymakers in several EMEA sovereigns are implementing reforms. IMF lending programs in Benin, Cote d'Ivoire, Egypt, Jordan, and Togo underpin recent upgrades and/or positive outlooks.
Regional Highlights
Chart 1
Chart 2
The average rating on the 55 EMEA emerging market sovereigns rated by S&P Global Ratings remains below pre-pandemic levels and nearly two notches below the average during the global financial crisis in 2008. However, we are not comparing like with like in this context, because over the past 15 years, frontier markets have made up an increasing proportion of our EMEA emerging market sovereign ratings. At present, eight of the 13 frontier sovereigns rated 'CCC+' or below globally are EMEA emerging markets. Moreover, on a GDP-weighted basis, EMEA emerging market sovereign ratings have not materially changed on average since the COVID-19 pandemic (excluding Russia).
Chart 3
Six of the seven positive outlooks on EMEA emerging markets and both negative outlooks are linked to ratings on sovereigns in the Middle East, North Africa, and Sub-Saharan Africa. Clearer reform pathways in Saudi Arabia, South Africa, and Morocco, policy anchors, alongside IMF and Gulf Cooperation Council (GCC) support in Egypt, could translate into higher ratings over 2025.
Other improving credit stories include Côte d'Ivoire, Benin, and Togo, all of which have benefited from the West African Economic and Monetary Union's (WAEMU's) sustained strong monetary settings--as well as fiscally focused IMF lending programs--which we believe will continue to encourage growth, fiscal stability, and disinflation. Oman's fiscal reforms have put the government in a net asset position as of end-2024, while business-friendly economic policies underpin resilient growth in Jordan, despite the country's proximity to conflict zones in the Middle East.
Chart 4
Central And Eastern Europe (CEE) And Commonwealth Of Independent States (CIS)
Most of our CEE sovereign ratings carry stable outlooks, underpinned by our expectation of stabilizing GDP growth, contained balance-of-payment risks, ongoing disinflation and monetary easing, and moderate government debt. We project that GDP growth in CEE will average 2.0% this year and accelerate to 2.8% in 2025 due to strengthening consumer and investment spending and generous EU fund inflows--primarily on the capital account. These inflows will help overfund CEE economies' modest current account deficits and maintain their generally strong external stock positions.
That said, uncertainty about the external backdrop has increased because of the scope of global trade and geopolitical tensions. Both will be partly influenced by the policy implementation of the incoming U.S. administration. CEE is one of the most open and trade-intensive regions globally, with exports to GDP averaging more than 60%. Credit risks in CEE include weaker GDP growth in the eurozone than we expect, higher geopolitical uncertainty, subdued EU fund inflows, fiscal complacency, and monetary policy missteps.
CEE and CIS sovereigns accounted for five of the 12 upgrades in EMEA emerging markets in 2024. Most of our positive rating actions in these regions focused on tourism- and service-oriented sovereigns and included upgrades of Montenegro, Turkiye, Albania, Serbia, and Tajikistan, as well as an outlook revision to positive from stable in the case of Bulgaria. The recovery of tourism has spurred economic growth in CEE and CIS countries since 2023. A number of CIS countries, including Tajikistan, have benefitted from capital inflows from Russia and high gold prices, although the former have normalized following an initial surge.
Yet CEE sovereigns such as Hungary, Poland, Slovakia, and Romania face headwinds from heightened fiscal challenges. As these countries grapple to meet the fiscal consolidation targets outlined in the EU's excessive deficit procedure, weaker fiscal efforts could worsen their funding conditions.
The GCC Region And The Middle East
The fallout from the Israel-Hamas-Hezbollah conflict on sovereign ratings in the wider Middle East and GCC region has been relatively contained and we do not expect it to derail strong growth momentum in the GCC region. Yet the effects on sovereigns that are directly involved in the conflict have been more pronounced. We lowered the rating on Israel to 'A' from 'AA-' and revised the outlook to negative from stable due to continued security risks. Israel and Senegal are the only sovereigns in the EMEA emerging markets with a negative outlook.
Lebanon remains in default and we consider that an economic recovery will be more protracted if hostilities resume after the ceasefire between Israel and Hezbollah. Still, recent events in Syria demonstrate the rapid speed at which regionally relevant geopolitical developments can lead to increased complexity and vulnerabilities in countries whose economic prospects lag those of their neighbors.
Upgrades of sovereigns in the GCC region and the Middle East--Oman, Jordan, and Ras Al Khaimah--generally reflect the benefits of structural reforms. Together with supportive hydrocarbon prices, these reforms have enabled sustained deleveraging in Oman and resilient growth in Ras Al Khaimah, Jordan, and Morocco. The positive outlook on Saudi Arabia is underpinned by continued reform momentum, which aims to increase economic diversification while maintaining fiscal control.
In the case of Egypt, the outlook revision reflected the government's significant steps, as part of its IMF program, to improve macroeconomic stability--including the liberalization of the exchange rate and a commitment to budgetary consolidation--and considerable external funding. We expect these developments to gradually reduce Egypt's indebtedness. Yet Egypt's very high level of interest payments as a portion of revenue, which we forecast will be about 70% in 2025, will remain a constraint.
Most EMEA emerging market sovereigns remain fiscally and economically sensitive to oil prices, depending on whether they are importers (CEE plus Turkiye and the Balkans) or exporters (GCC). In 2025, we estimate the average fiscal breakeven oil price for the GCC region at $81 per barrel (/bbl), above our expectation of $75/bbl. While returns on large asset stocks provide a substantial buffer for some sovereigns (Abu Dhabi, Qatar, Kuwait, and Saudi Arabia), the potential for additional oil supply or weaker oil demand will continue to pose risks.
On the other hand, the current turmoil in Syria, amid a series of Israeli strikes on Iran and Syria, could, in tandem with the return of Donald Trump as U.S. President, roil regional politics even further. However, our base case is that this does not lead to any meaningful decline in oil production in Iran, the region's second-largest producer after Saudi Arabia.
Africa
Africa saw more upgrades over 2024 than any other region globally, reflecting our view of WAEMU sovereigns' macroeconomic resilience in the face of a series of external shocks, underpinned by structural supports connected to membership of the WAEMU. Over the course of 2024, we upgraded Côte d'Ivoire and Benin and revised the outlook on Benin and Togo to positive from stable. Easing liquidity constraints in Cameroon and fiscal consolidation efforts in Cape Verde, in both cases with support from the IMF, contributed to the upgrades.
At present, five sovereigns in Africa (South Africa, Benin, Egypt, Morocco, and Togo) are on a positive outlook, compared with only one on a negative outlook (Senegal), reflecting large fiscal deviations due to higher spending on subsidies during 2024 and administrative challenges in Senegal amid rising government debt. In the course of 2024, we lowered the rating on Kenya due to the protest-driven reversal of its consolidating finance bill, and downgraded Congo-Brazzaville because of domestic bond switches that we viewed as distressed.
While the average rating in Sub-Saharan Africa has improved over the past year--to close to 'B' as of December 2024--structural weaknesses in the region remain notable, not least in public finances. In Sub-Saharan Africa as a whole, average gross general government debt will have almost doubled since 2010, to an estimated 60% of GDP next year. Interest costs as a proportion of government revenue have increased from 6% over the same period, and we expect them to reach 16% in 2025.
Finally, average government revenues over GDP are likely to remain under pressure next year, remaining slightly below where they were in 2010.
As a consequence of these pressures and elevated Eurobond maturities next year, we could see another step-up in the frequency of liability-management exercises, including debt exchanges. Sovereigns in Sub-Saharan Africa make up a large share of the governments we rate 'CCC+' and below. This partly reflects protracted default negotiations in Ghana, Zambia, and Mozambique.
Abu Dhabi (AA/Stable/A-1+)
- Analyst: giulia.filocca@spglobal.com
- Latest publication: (Full Analysis) Emirate of Abu Dhabi, Nov. 25, 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)
Albania (BB-/Stable/B)
- Analyst: amr.abdullah@spglobal.com
- Latest publication: (Full Analysis), Sept. 23, 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 assessment that the risks to Albania's economic, external, and fiscal performance are balanced.
Downside scenario
We could lower the ratings if Albania's debt levels substantially surpass our projections, which could happen due to an unexpected loosening of the government's fiscal policies. Furthermore, a downgrade could occur if pressures on the current account intensify beyond our base case, resulting in a pronounced reduction in the Bank of Albania's (BoA's) foreign exchange reserves, thereby exacerbating external vulnerabilities.
Upside scenario
We might consider raising the ratings if the following conditions are met:
- There is a significant improvement in the government's fiscal position, such as enhanced revenue collection.
- External performance shows positive trends, such as a reduction in the trade deficit or an increase in services surpluses, thereby reducing external funding risks.
- Albania strengthens its institutional framework, for instance, by implementing structural reforms aligned with the country's EU accession goals.
(Latest research update published on March 22, 2024)
Angola (B-/Stable/B)
- Analyst: leon.bezuidenhout@spglobal.com
- Latest publication: Angola Ratings Affirmed At 'B-/B'; Outlook Remains Stable, Aug. 16, 2024
Rating score snapshot:
- Institutional assessment: 5
- Economic assessment: 6
- External assessment: 5
- 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, stable oil production, and adequate foreign exchange reserves.
Downside scenario
We could lower the rating if a deterioration in the external environment, or an increase in social pressures, were to limit the government's ability to service its commercial debt. Debt servicing could be affected if the government's access to external funding weakened or there were further exchange rate shocks tied to lower oil prices or volumes.
Upside scenario
We could raise the rating if Angola's economic and fiscal reforms helped it sustain a recovery in the oil and non-oil economies, while also reducing its debt-servicing burden and borrowing costs as well as increasing foreign currency reserves beyond our projections.
Armenia (BB-/Stable/B)
- Analyst: amr.abdullah@spglobal.com
- Latest publication: Armenia 'BB-/B' Ratings Affirmed; Outlook Stable, Aug. 23, 2024
Rating score snapshot:
- Institutional assessment: 5
- Economic assessment: 3
- External assessment: 4
- Fiscal assessment – Flexibility and performance: 4
- Fiscal assessment – Debt burden: 4
- Monetary assessment: 4
Outlook: Stable
The stable outlook reflects the balance between Armenia's strong economic growth prospects and moderate general government debt levels, against existing vulnerabilities in the balance of payments, and heightened geopolitical risks.
Upside scenario
We could consider a positive rating action if Armenia's public finances significantly outperform our expectations, or if the risk of a sharp reversal of Russian capital flows eases, thereby minimizing potential balance of payments pressure. Additionally, a reduction in geopolitical risks would further support a positive rating action.
Downside scenario
We may consider lowering the ratings if significant balance of payments pressures materialize and fiscal performance falls significantly below our current projections. This scenario could arise from escalating geopolitical tensions with Armenia's neighbors or a reversal of financial and labor flows from Russia.
Azerbaijan (BB+/Stable /B)
- Analyst: maxim.rybnikov@spglobal.com
- Latest publication: Azerbaijan Ratings Affirmed At 'BB+/B'; Outlook Stable, Dec. 6, 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 gradual decline in oil production, Azerbaijan's significant fiscal and external buffers will help to shield the economy against possible terms-of-trade shocks.
Downside scenario
We could lower the ratings if Azerbaijan's fiscal balances prove substantially weaker than we expect over the medium term. For example, this could occur if oil production falls faster than expected as Azerbaijan's oil fields age.
Upside scenario
We could raise the ratings if Azerbaijan continues to run recurring twin fiscal and current account surpluses and the geopolitical risks in the region subside.
Bahrain (B+/Stable/B)
- Analyst: giulia.filocca@spglobal.com
- Latest publication: (Full Analysis) Bahrain, Nov. 25, 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.
(Latest research update published on May 24, 2024)
Benin (BB-/Positive/B)
- Analyst: sebastien.boreux@spglobal.com
- Latest publication: Benin Outlook Revised To Positive From Stable On Strong Budgetary Prospects; 'BB-/B' Ratings Affirmed, Oct. 18, 2024
Rating score snapshot:
- Institutional assessment: 4
- Economic assessment: 4
- External assessment: 5
- Fiscal assessment – Flexibility and performance: 3
- Fiscal assessment – Debt burden: 5
- Monetary assessment: 4
Outlook: Positive
The positive outlook reflects our expectation that, despite low GDP per capita, relatively high external imbalances, and regional tensions, Benin's budgetary position and debt profile could improve more than we currently expect, reflecting the economy's positive growth prospects and strong reform drive.
Upside scenario
We could raise the ratings on Benin within the next 12-18 months if reform implementation, coupled with dynamic economic activity, results in materially higher-than-currently-projected government revenue and a lower debt burden. Improved external performances supported by stronger exports could also put positive pressure on the ratings.
Downside scenario
We could revise the outlook to stable within the same timeframe if the country's external position significantly deteriorates, for example from lower-than-expected export revenue or a negative terms of trade shock.
A slowdown in economic activity or delays in implementing revenue-enhancing measures could result in significant deviation from our current forecasts, putting downward pressure on the outlook.
Bosnia and Herzegovina (B+/Stable/B)
- Analyst: niklas.steinert@spglobal.com
- Latest publication: Bosnia and Herzegovina 'B+/B' Ratings Affirmed; Outlook Stable, Aug. 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.
Botswana (BBB+/Stable/A-2)
- Analyst: ravi.bhatia@spglobal.com
- Latest publication: (Full Analysis) Botswana, Sept. 16, 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.
(Latest research update published on March 15, 2024)
Bulgaria (BBB/Positive/A-2)
- Analyst: karen.vartapetov@spglobal.com
- Latest publication: (Full Analysis) Bulgaria, Nov. 25, 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.
(Latest research update published on May 24, 2024)
Burkina Faso (CCC+/Stable/C)
- Analyst: salvador.rodriguez@spglobal.com
- Latest publication: (Full Analysis) Burkina Faso, Nov. 11, 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: 4
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 in WAEMU, which provides support.
Downside scenario
We could lower the ratings if institutional instability leads to slowing economic growth and weaker budgetary metrics, or financial sanctions and economic deterioration lead to heightening rollover 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 tensions with ECOWAS or WAEMU becoming more remote, allowing for stronger-than-expected GDP growth and a budgetary consolidation path.
(Latest research update published on Oct. 18, 2024)
Cameroon (B-/Stable/B)
- Analyst: sebastien.boreux@spglobal.com
- Latest publication: (Full Analysis) Cameroon, Sept. 23, 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 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 around 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.
(Latest research update published on March 22, 2024)
Cape Verde (B/Stable/B)
- Analyst: ravi.bhatia@spglobal.com
- Latest publication: Cape Verde Upgraded To 'B/B' On Fiscal And External Consolidation; Outlook Stable, Aug. 16, 2024
Rating score snapshot:
- Institutional assessment: 4
- Economic assessment: 5
- External assessment: 5
- Fiscal assessment – Flexibility and performance: 4
- Fiscal assessment – Debt burden: 6
- Monetary assessment: 5
Outlook: Stable
The stable outlook balances our expectation of supportive fiscal and external dynamics aided by strong economic growth, against Cabo Verde's very high stock of general government debt and sizable contingent liabilities. We assume that Cabo Verde's track record of strong bilateral and multilateral donor relationships will remain unchanged.
Upside scenario
We could raise the ratings if we observed continued strong GDP growth supporting ongoing fiscal consolidation and a significant reduction in general government debt (net of liquid assets) as a percentage of GDP. A reduction in contingent liabilities associated with SOEs would also support the ratings.
Downside scenario
We could lower the ratings if Cabo Verde's GDP growth were to falter, if fiscal consolidation were to stall, external imbalances emerged, or the materialization of contingent liabilities hampered fiscal consolidation efforts.
We could also lower our ratings on Cabo Verde if the government restructured its commercial debt obligations in a way that we considered a distressed exchange.
Chad (B-/Stable/B)
- Analyst: sebastien.boreux@spglobal.com
- Latest Publication: Republic of Chad Assigned 'B-/B' Sovereign Ratings; Outlook Stable, Oct. 28, 2024
Rating score snapshot:
- Institutional assessment: 6
- Economic assessment: 6
- External assessment: 6
- Fiscal assessment – Flexibility and performance: 5
- Fiscal assessment – Debt burden: 3
- Monetary assessment: 5
Outlook: Stable
The stable outlook balances risks from Chad's high oil reliance, the volatile security situation in the region, and its difficult business environment against its reasonably solid economic growth prospects and favorable government-debt structure.
Downside scenario
We could lower the ratings on Chad if acute liquidity pressures on the government accounts were to surface, notably if oil prices were to significantly decline, or if its security situation deteriorated materially, threatening its institutions and the government's ability to service its liabilities on time and in full.
Upside scenario
We could raise the ratings if economic growth materially overperforms our expectations, driven by diversification and investments, while substantially higher government revenue strengthens the budgetary position, with net general government debt stabilizing below 30% of GDP.
Congo-Brazzaville (CCC+/Stable/C)
- Analyst: hugo.soubrier@spglobal.com
- Latest publication: Congo-Brazzaville Local Currency Rating Raised To 'CCC+' On Finalized Debt Exchange; FC Rating Affirmed; Outlook Stable, Nov. 19, 2024
Rating score snapshot:
- Institutional assessment: 6
- Economic assessment: 6
- External assessment: 6
- Fiscal assessment – Flexibility and performance: 4
- Fiscal assessment – Debt burden: 6
- Monetary assessment: 5
Outlook: Stable
The stable outlook balances our view of Congo's improved amortization schedule against risks stemming from its limited ability to secure funding and broader macroeconomic vulnerabilities.
Downside scenario
We could lower the ratings if liquidity pressures severely impair the government's ability to service its commercial debt obligations, or if the government includes them in a debt restructuring.
Upside scenario
We could raise the ratings if lower refinancing needs and solid budgetary outcomes saw liquidity pressures abate. An upgrade would also be contingent on the government's renewed commitment not to restructure its commercial debt.
Cote d'Ivoire (BB/Stable/B)
- Analyst: sebastien.boreux@spglobal.com
- Latest Publication: (Full Analysis) Cote d'Ivoire, Nov. 18, 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: 4
Outlook: Stable
The stable outlook reflects the balance between risks from Cote d'Ivoire's still-elevated external financing needs, high external leverage, and political uncertainty against the economy's solid growth prospects, strong donor support, and an expected decline in budgetary and external imbalances.
Downside scenario
We could lower the rating on Cote d'Ivoire if external imbalances were to persist and external leverage does not decline as we expect.
While not our base-case scenario, downward pressure on the ratings could emerge if a pronounced rise in domestic political tensions hinders policymaking consistently.
Upside scenario
We could raise the ratings if Cote d'Ivoire's budget position improves more than we expect or its still-large external financing needs were to materially decline.
(Latest research update published on May 17, 2024
Democratic Republic of Congo (B-/Stable/B)
- Analyst: mickael.vidal@spglobal.com
- Latest publication: Democratic Republic of Congo 'B-/B' Ratings Affirmed; Outlook Stable, July 26, 2024
Rating score snapshot:
- Institutional assessment: 5
- 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 on DRC reflects our expectation that economic growth will remain robust, driven largely by the mining sector; and that external, inflationary, and security pressures will remain significant, although gradually easing.
Downside scenario
We could lower our sovereign ratings on DRC if the political or security situation were to worsen significantly, preventing access to external financing (for example), or if balance of payments or fiscal vulnerabilities were to heighten significantly.
Upside scenario
We could raise our ratings if economic growth is significantly stronger than we expect, while external pressures continue to ease and the country retains access to external financing.
Egypt (B-/Positive/B)
- Analyst: ravi.bhatia@spglobal.com
- Latest publication: Egypt Ratings Affirmed At 'B-/B'; Outlook Remains Positive, Oct. 18, 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: 4
Outlook: Positive
The positive outlook reflects the potential for further improvements in Egypt's external and fiscal positions. It also reflects our view that the new exchange rate regime, driven by market forces, will help drive GDP growth and, over time, support fiscal consolidation.
Downside scenario
We could revise the outlook to stable if the authorities' commitment to macroeconomic reform, including exchange-rate flexibility, wanes, and if economic imbalances such as foreign currency shortages build again. We could also take a negative rating action if high interest costs prompt the government to undertake a debt exchange that we consider to be distressed, or if regional geopolitical risks begin to significantly affect Egypt.
Upside scenario
We could consider raising our ratings if Egypt's net government or external debt positions improve much faster than we currently expect, possibly via accelerated deleveraging, or if FDI increased, supported by the planned sale of state assets
Ethiopia (SD/SD)
- Analyst: giulia.filocca@spglobal.com
- Latest publication: Ethiopia Long-Term Local Currency Rating Raised To 'CCC+'; Outlook Stable; Foreign Currency Rating Affirmed At 'SD', Sept. 20, 2024
Rating score snapshot:
- Institutional assessment: 6
- Economic assessment: 6
- External assessment: 6
- Fiscal assessment – Flexibility and performance: 6
- Fiscal assessment – Debt burden: 3
- Monetary assessment: 6
Outlook:
Local currency rating. The stable outlook on the long-term local currency rating balances Ethiopia's increased concessional external financing availability and still-manageable cost of domestic debt against its high gross borrowing requirements.
Foreign currency rating. Our long-term foreign currency rating on Ethiopia is 'SD' because the government remains in arrears on its commercial debt obligations, including its Eurobond. We do not assign outlooks to 'SD' ratings because they express a condition and not a forward-looking opinion of default probability.
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 Ethiopia's macroeconomic imbalances moderated and financing options widened further.
Foreign currency rating. We will likely raise our foreign currency ratings from 'SD' once Ethiopia completes debt restructuring with a significant majority of its commercial creditors. The subsequent ratings would reflect Ethiopia's post-restructuring creditworthiness, factoring in its debt burden and macroeconomic prospects.
Georgia (BB/Stable/ B)
- Analyst: amr.abdullah@spglobal.com
- Latest publication: Georgia 'BB/B' Ratings Affirmed; Outlook Stable, Aug. 9, 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 balances Georgia's strong economic and fiscal performance against growing policy uncertainty, which we expect will persist over the next 12 months.
Downside scenario
Rating pressure could emerge from a significant escalation in domestic political tensions, which could undermine investor confidence and hinder Georgia's growth prospects. Additionally, rating stress could intensify in a scenario characterized by reverse migration and capital outflows, leading to a marked deterioration in public finances and the balance of payments.
Upside scenario
We could consider a positive rating action within the next 12 months if Georgia's economic and fiscal performance exceeds our projections and domestic political uncertainty diminishes.
Ghana (SD/SD)
- Analyst: frank.gill@spglobal.com
- Latest publication: (Full Analysis) Ghana, Nov. 25, 2024
Rating score snapshot:
- Institutional assessment: 6
- Economic assessment: 5
- External assessment: 5
- 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
We could lower the outlook on the local currency ratings to negative should Ghana's fiscal and external outcomes worsen.
Upside scenario
We could raise our long-term foreign currency rating if Ghana completes the restructuring of the remaining external commercial debt. Our analysis will incorporate the sovereign's post-restructuring credit factors, including the new terms and conditions of its external debt.
We could raise the local currency ratings if Ghana makes further progress on stabilizing its public finances and accumulating foreign currency reserves.
(Latest research update published on Oct. 15, 2024)
Hungary (BBB-/Stable/A-3)
- Analyst: gabriel.forss@spglobal.com
- Latest publication: Hungary 'BBB-/A-3' Ratings Affirmed; Outlook Stable, Oct. 25, 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 stabilizing cost of debt will support the government's fiscal consolidation efforts in the medium term, allowing the government's debt burden (as a share of GDP) to stabilize.
Downside scenario
We could lower the ratings should Hungary's fiscal performance prove much weaker than our forecasts, or if external pressures re-emerge, for example from an energy supply shock, affecting the forint exchange rate and inflation.
Upside scenario
We could raise the ratings if Hungary's fiscal position improved significantly, alongside a reduction in its external vulnerabilities.
Iraq (B-/Stable/B)
- Analyst: Giulia.filocca@spglobal.com
- Latest publication: (Full Analysis) Iraq, Aug. 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 and security backdrop remains 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)
Israel (A/Negative/A-1)
- Analyst: maxim.rybnikov@spglobal.com
- Latest publication: (Full Analysis) Israel, Nov. 11, 2024
Rating score snapshot:
- Institutional assessment: 4
- Economic assessment: 1
- External assessment: 1
- Fiscal assessment – Flexibility and performance: 5
- Fiscal assessment – Debt burden: 4
- Monetary assessment: 2
Outlook: Negative
The negative outlook reflects the risks to Israel's growth, public finances, and balance of payments from the intensifying conflict with Hezbollah in Lebanon, including direct security threats in case of retaliatory rocket attacks against Israel. The negative outlook also reflects the risk of a more direct war with Iran, although this is not in our current base case.
Downside scenario
We could lower the ratings on Israel in the next 24 months if the military conflicts hamper Israel's economic growth, fiscal position, and balance of payments more than we currently anticipate. This could be the case, for example, if the ongoing conflicts continue to spread, raising the risks of retaliatory attacks against Israel, or if the prospect of a wider regional war directly involving Iran increases.
Upside scenario
We could revise the outlook to stable if we observed a reduced likelihood of military escalation and broader security risks reduced.
(Latest research update published on Oct. 1, 2024)
Jordan (BB-/Stable/B)
- Analyst: samuel.tilleray@spglobal.com
- Latest publication: Jordan Upgraded To 'BB-' On Economic Resilience; Outlook Stable, Sept. 6, 2024
Rating score snapshot:
- Institutional assessment: 4
- Economic assessment: 5
- 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 Jordan's structural economic improvements will remain resilient to strains emanating from the ongoing--and potentially escalating--Israel-Hamas conflict. We think Jordan will effectively leverage international support and has adequate domestic policy buffers to manage the impact of the conflict on tourism and the broader economy.
Downside scenario
We could lower the ratings over the next 12 months if reform momentum stalled, undoing fiscal consolidation efforts, for instance due to rising domestic spending pressure. Rating pressure could also stem from a significant escalation of the Israel-Gaza war, particularly if it caused disruption to Jordan's water transfers and gas from Israel. Additionally, we could take a negative rating action if the currently strong bilateral and multilateral donor support Jordan receives unexpectedly diminished, causing external financing pressure.
Upside scenario
We could raise the ratings if Jordan's external imbalances diminished, for instance due to a sustained improvement in the current account deficit from either higher exports or lower imports. An upgrade is also likely to hinge on whether the government is sufficiently reducing its net debt-to-GDP ratio without markedly undermining growth. We see these scenarios as unlikely over the next 12 months.
Kazakhstan (BBB-/Stable/A-3)
- Analyst: Zahabia.gupta@spglobal.com
- Latest publication: (Full Analysis) Kazakhstan, Aug. 26, 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 grew strongly or if the 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.
(Latest research update published on March 1, 2023)
Kenya (B-/Stable/B)
- Analyst: giulia.filocca@spglobal.com
- Latest publication: Kenya Downgraded To 'B-' On Weaker Fiscal And Debt Trajectory; Outlook Stable, Aug. 23, 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: Stable
The outlook is stable because we expect strong economic growth and continued access to concessional external financing will balance pressures from high interest costs, slower fiscal consolidation, and structural external imbalances.
Downside scenario
We could lower the ratings if Kenya's external or domestic refinancing pressures mount, likely due to a sustained decline in foreign exchange reserves or domestic liquidity; or if we perceive any future debt-repurchase operations, domestic or external, 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 interest costs.
Upside scenario
We could raise the ratings if Kenya's external and domestic financing pressures are contained or if we observe a renewed commitment to sustainable public finances, as shown by significant progress toward fiscal consolidation through revenue and expenditure reforms.
Kuwait (A+/Stable /A-1)
- Analyst: ravi.bhatia@spglobal.com
- Latest publication: Kuwait Ratings Affirmed At 'A+'; Outlook Remains Stable, Dec. 9, 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.
Lebanon (SD/SD)
- Analyst: juili.pargaonkar@spglobal.com
- Latest publication: (Full Analysis) Lebanon, Aug. 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: 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.
(Latest research update published on Feb. 16, 2024)
Madagascar (B-/Stable/B)
- Analyst: sebastien.boreux@spglobal.com
- Latest publication: (Full Analysis) Madagascar, Oct. 7, 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 balances Madagascar's relatively solid economic growth prospects, gradually improving budgetary position, solid foreign currency reserves position, and support from international donors against risk of budgetary pressures from ailing SOEs, a stifling business environment, and vulnerability to swings in commodity prices and climate related disasters.
Downside scenario
We could lower the ratings if the budgetary position deteriorates materially, including from 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 a faster budgetary consolidation than we currently expect, supported by a meaningful increase in government revenue and lower risks from SOEs.
(Latest research update published on April 11, 2023)
Mauritius (BBB-/Stable/A-3)
- Analyst: remy.carasse@spglobal.com
- Latest publication: (Full Analysis) Mauritius, July 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)
Montenegro (B+/Stable/B)
- Analyst: amr.abdullah@spglobal.com
- Latest publication: Montenegro Upgraded To 'B+' On Stronger External And Fiscal Positions; Outlook Stable, Aug. 30, 2024
Rating score snapshot:
- Institutional assessment: 4
- Economic assessment: 4
- External assessment: 5
- Fiscal assessment – Flexibility and performance: 4
- Fiscal assessment – Debt burden: 4
- Monetary assessment: 6
Outlook: Stable
The outlook is stable because we expect potential further improvements in Montenegro's external position will balance risks posed by possible medium-term fiscal slippages stemming from higher spending, including on public wages and pensions.
Upside scenario
We could raise our ratings over the next 12 months if Montenegro's fiscal performance proved stronger than we currently forecast, underpinning a further reduction of net general government debt over the medium term. This could happen, for example, if the country shows stronger economic growth or the government exercises prudent expenditure control. Additionally, we could raise the ratings if Montenegro's external position strengthened beyond our current base-case forecast.
Downside scenario
We could lower the ratings if Montenegro's fiscal performance were materially weaker than we expect, with an unchecked material increase in net general government debt over the medium term.
Morocco (BB+/Positive/B)
- Analyst: remy.carasse@spglobal.com
- Latest publication: (Full Analysis) Morocco, Sept. 30, 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.
Downside scenario
We could revise the outlook to stable within the next 12 months if economic growth, budgetary consolidation, or the reform momentum prove weaker than we currently expect.
Upside scenario
We could raise our ratings on Morocco within the next 12 months if the government continues to implement structural reforms, that result in stronger economic growth and a broadening of the tax base, while budget deficits continue to decline.
(Latest research update published on March 29, 2024)
Mozambique (CCC+/Stable/C)
- Analyst: leon.bezuidenhout@spglobal.com
- Latest publication: Mozambique Local Currency Rating Lowered To 'CCC' On Domestic Liquidity Strain; 'CCC+' Foreign Currency Rating Affirmed, Oct. 18, 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: Stable
The stable outlook reflects the balance between the near-term ongoing liquidity pressures and lingering administrative shortcomings in Mozambique's debt management against the more favorable medium-term growth prospects--driven by several major liquefied natural gas (LNG) projects scheduled to become operational over the next 10 years--and reform plans that are supported by policies under an IMF program.
Downside scenario
We could lower the local currency and foreign currency ratings on Mozambique if the government's liquidity position weakened--as seen, 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 delays to the large gas projects made the government less willing or able to service its commercial debt obligations in a timely manner.
We could lower the local currency ratings to 'SD' (selective default) if we assessed that delays on local currency debt payments constituted a default or if we were to view a future local currency debt liability management exercise as a de facto distressed debt exchange, according to our definitions (see "S&P Global Ratings Definitions," published Oct. 15, 2024, on RatingsDirect).
Upside scenario
We could raise the ratings if government revenue strengthened materially, for example due to a rise in gas production over the medium term, ultimately allowing Mozambique to stabilize its fiscal position.
Nigeria (B-/Stable/B)
- Analyst: ravi.bhatia@spglobal.com
- Latest publication: (Full Analysis) Nigeria, Aug. 5, 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 economic stability and confidence from inflation and a volatile currency.
Downside scenario
We could lower the ratings over the next 12 months if risks to Nigeria's capacity to repay commercial obligations increase. 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 meaningfully.
(Latest research update published on Feb. 2, 2024)
North Macedonia (BB-/Stable/B)
- Analyst: amr.abdullah@spglobal.com
- Latest publication: (Full Analysis) North Macedonia, July 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)
Oman (BBB-/Stable/A-3)
- Analyst: olivia.grant@spglobal.com
- Latest publication: Oman Upgraded To 'BBB-' From 'BB+' On Continued Public Sector Deleveraging; Outlook Stable, Sept. 27, 2024
Rating score snapshot:
- Institutional assessment: 4
- Economic assessment: 4
- External assessment: 4
- Fiscal assessment – Flexibility and performance: 1
- Fiscal assessment – Debt burden: 2
- Monetary assessment: 4
Outlook: Stable
The stable outlook balances the potential benefits of the government's fiscal and economic reform program against the economy's structural susceptibility to adverse oil price shocks.
Upside scenario
We could raise the ratings over the next two years if reforms lead to steady growth in Oman's GDP per capita supported by continued momentum in non-oil growth. Measures to strengthen institutions that, for example, support economic diversification and the development of domestic capital markets, could be positive for the ratings.
Downside scenario
We could lower the ratings if fiscal and economic reform implementation were to slow, or an unfavorable external environment such as a terms of trade shock were to result in fiscal deficits and net debt levels significantly above our forecasts.
Poland (A-/Stable/A-2)
- Analyst: ludwig.heinz@spglobal.com
- Latest publication: Poland 'A-/A-2' Foreign Currency Ratings Affirmed; Outlook Stable, Nov. 8, 2024
Rating score snapshot:
- Institutional assessment: 4
- Economic assessment: 3
- External assessment: 2
- Fiscal assessment – Flexibility and performance: 5
- Fiscal assessment – Debt burden: 3
- Monetary assessment: 2
Outlook: Stable
The stable outlook reflects the balance between Poland's favorable medium-term growth prospects against the near-term risks it faces from elevated fiscal deficits and rapidly rising debt, amid increasing external risks to its economy.
Upside scenario
We could raise the ratings if a sustained track record of institutional and governance improvements helps preserve the flow of EU funds and net foreign direct investment (FDI), supporting Poland's medium-term growth prospects.
Downside scenario
We could lower the ratings if debt increased beyond our projections, which could indicate a more permanent deterioration in fiscal policy management. We could also lower the ratings if Poland's medium-term growth prospects deteriorated significantly, possibly coupled with renewed external shocks, including unexpected spillovers from, and reduced confidence linked to, the Russia-Ukraine war.
Qatar (AA/Stable/A-1+)
- Analyst: juili.pargaonkar@spglobal.com
- Latest publication: Qatar Ratings Affirmed At 'AA/A-1+'; Outlook Stable, Nov. 1, 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 position as one of the world's largest exporters of LNG over the next two years, further boosted by production increases through the NFE project 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 could lead to a significant weakening of the budgetary performance and a decline in available fiscal assets.
Upside scenario
We could raise the ratings if risks related to Qatar's external position reduced, including a decline in the country's external financing 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.
Ras al Khaimah (A/Stable/A-1)
- Analyst: juili.pargaonkar@spglobal.com
- Latest publication: Ras Al Khaimah Upgraded To 'A/A-1' On Stronger Growth Prospects And Resilient Fiscal Performance; Outlook Stable, Nov. 22, 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: Stable
The stable outlook reflects our expectation that RAK's economic growth and fiscal position will remain strong over our forecast period.
Upside scenario
We could raise the ratings over the next two years if RAK's GDP per capita income strengthens beyond our expectations, while the government continues to maintain its net asset position underpinned by strong fiscal performance.
Downside scenario
We could lower the rating on RAK if the government's fiscal position materially deteriorates. This could happen, for example, if the government faces significant cost overruns for ongoing development projects or if these projects underperform our expectations. Downward pressure on the rating could also stem from interest costs rising as a proportion of revenue, if revenue streams underperform.
Romania (BBB-/Stable/A-3)
- Analyst: niklas.steinert@spglobal.com
- Latest publication: Romania 'BBB-/A-3' Ratings Affirmed; Outlook Stable, Oct. 11, 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 still-moderate stock of external and government debt and a stronger growth outlook from 2025. We anticipate that Romania's commitments under the EU's Recovery and Resilience Facility (RRF) and the Excessive Deficit Procedure (EDP) will anchor the authorities' commitment to fiscal consolidation over the next seven years.
Downside scenario
We could lower the ratings if government deficits exceed our current projections over the medium term, which would result in rising debt levels. We could also downgrade Romania if other existing imbalances persisted, such as high inflation or substantial current account deficits (CADs), which could result in a macroeconomic correction with lower growth.
Upside scenario
We could raise the rating if Romania's fiscal deficits narrowed substantially and government debt levels 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 than we anticipate.
Rwanda (B+/Stable/B)
- Analyst: leon.bezuidenhout@spglobal.com
- Latest publication: Rwanda Affirmed At 'B+/B'; Outlook Remains Stable, July 26, 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 Rwanda's balance-of-payments vulnerabilities and regional security risks against the country's narrowing fiscal deficits, strong growth, and continued access to low-cost, concessional financing.
Downside scenario
We could lower the ratings over the next 12 months if Rwanda's fiscal performance proves weaker than forecast, driving up the already-elevated net general government debt further and increasing the cost of servicing it.
We could also lower the ratings if regional security tensions, such as those stemming from the eastern area of the Democratic Republic of Congo (DRC), were to escalate, and this had adverse effects on Rwanda's growth, budgetary, and balance-of-payments metrics.
Upside scenario
We could raise our ratings on Rwanda over the next 12 months if the economy grows faster than we forecast while both fiscal and balance-of-payments vulnerabilities ease.
Saudi Arabia (A/Positive/A-1)
- Analyst: Zahabia.gupta@spglobal.com
- Latest publication: Saudi Arabia Outlook Revised To Positive On Sustained Reform Momentum; 'A/A-1' Ratings Affirmed, Sept. 13, 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: Positive
The positive outlook reflects the potential that the Saudi government's wide-ranging reforms and investments will underpin the development of the non-oil economy while upholding sustainable public finances.
Upside scenario
We could raise the ratings over the next two years if reforms lead to steady growth in GDP per capita supported by continued momentum in non-oil growth. Furthermore, measures to strengthen institutions that, for example, support the effective implementation of the ongoing economic transformation and development of domestic capital markets, could be positive for the ratings.
Downside scenario
We could revise the outlook to stable if we observed pronounced fiscal weakening, or if real per capita GDP growth were to fall relative to our current forecasts. A material rise in domestic or regional instability could also weigh on the ratings.
Senegal (B+/Negative/B)
- Analyst: sebastien.boreux@spglobal.com
- Latest publication: (Full Analysis) Senegal, Dec. 2, 2024
Rating score snapshot:
- Institutional assessment: 4
- Economic assessment: 4
- External assessment: 5
- Fiscal assessment – Flexibility and performance: 5
- Fiscal assessment – Debt burden: 6
- Monetary assessment: 4
Outlook: Stable
The negative outlook reflects our view that Senegal's significant fiscal slippage this year and the potential large revisions in both the deficit and debt metrics for 2019-2023 are pressuring the country's institutional credibility. This is despite Senegal's still-solid medium-term growth prospects and support from WAEMU membership.
Downside scenario
We could lower our ratings on Senegal over the next 12 months if we determine that the country's institutional capacity to address the causes of any confirmed revision of past debt data, or to implement the necessary corrective measures for the significant budget deviation, is insufficient. This could result in slower fiscal consolidation than we currently anticipate, further delays in IMF disbursement, and potential liquidity pressures caused by high funding needs.
Upside scenario
We could raise the ratings or revise the outlook on Senegal to stable if the implementation of strong corrective measures causes fiscal and external metrics to improve faster than we project. We would also consider a positive rating action if the government's initiatives to expand the tax-base resulted in a more significant decline in net government borrowing requirements and public debt relative to GDP, supported by strong economic growth.
(Latest research update published on Oct. 18, 2024)
Serbia (BBB-/Stable/A-3)
- Analyst: amr.abdullah@spglobal.com
- Latest publication: Serbia Upgraded To 'BBB-/A-3' On Strong GDP Growth And Increased External Buffers; Outlook Stable, Oct. 4, 2024
Rating score snapshot:
- Institutional assessment: 4
- Economic assessment: 4
- External assessment: 3
- Fiscal assessment – Flexibility and performance: 3
- Fiscal assessment – Debt burden: 2
- Monetary assessment: 4
Outlook: Stable
The stable outlook reflects the balance between risks from protracted weakness in Serbia's key trading partners in the EU, like Germany and Italy, its heavy yet gradually decreasing dependence on Russian gas supplies, and regional geopolitical tensions, against the potential for the country's higher economic growth on the back of resilient domestic demand, as well as strengthening external buffers.
Upside scenario
We could upgrade Serbia if the country's GDP growth rates, and fiscal and external performance significantly outperform our projections. Improved governance standards, driven by structural reforms, could also serve as a potential catalyst for an upgrade. Ratings upside will likely be conditional on contained regional geopolitical risks.
Downside scenario
We could lower the ratings if an economic slowdown in Serbia's key EU trading partners, potential energy supply shocks, or heightened geopolitical tensions undermine the country's growth trajectory and exert pressure on its fiscal and balance of payments positions.
Sharjah (BBB-/Stable/A-3)
- Analyst: juili.pargaonkar@spglobal.com
- Latest publication: (Full Analysis) Emirate of Sharjah, Nov. 18, 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 consolidation measures or a further broadening of Sharjah's revenue base.
(Latest research update published on May 17, 2024)
St Helena (BBB-/Stable/A-3)
- Analyst: leon.bezuidenhout@spglobal.com
- Latest publication: (Full Analysis) St. Helena, Sept. 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 and narrow economy.
Downside scenario
We could lower the ratings over the next two years 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 exogenous shock, such as a pandemic or 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)
South Africa (BB-/Positve/B)
- Analyst: Zahabia.gupta@spglobal.com
- Latest publication: South Africa Outlook Revised To Positive On Improved Reform And Growth Potential, Nov. 15, 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: Positive
The positive outlook reflects the potential for stronger growth than we expect, alongside government debt stabilization, if the new coalition government can accelerate economic reforms while addressing infrastructure- and fiscal-related pressures.
Upside scenario
We could raise the ratings if an improving track record of effective reforms resulted in structural strengthening of economic growth and reduced government debt and contingent liabilities.
Downside scenario
We could revise the outlook to stable if ongoing economic and governance reforms do not progress, resulting in a deterioration in economic growth or higher-than-expected fiscal financing needs and interest burdens. This could result, for example, from worsening constraints of critical infrastructure.
Tajikistan (B/Stable/B)
- Analyst: giulia.filocca@spglobal.com
- Latest publication: Tajikistan Upgraded To 'B' On Stronger Fiscal Position; Outlook Stable, Aug. 16, 2024
Rating score snapshot:
- Institutional assessment: 5
- Economic assessment: 6
- External assessment: 3
- Fiscal assessment – Flexibility and performance: 4
- 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. We also expect the government's debt stock will remain highly concessional, offsetting risks from the country's structurally volatile external position.
Downside scenario
We could take a negative rating action should Tajikistan's external or fiscal performance prove much weaker than our baseline expectations. 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
A positive rating action could result from a sustained improvement in Tajikistan's governance, transparency, and data disclosure standards, including in the broader public sector.
Togo (B/Positive/B)
- Analyst: hugo.subrier@spglobal.com
- Latest publication: Togo 'B/B' Ratings Affirmed; Outlook Positive, Oct. 18, 2024
Rating score snapshot:
- Institutional assessment: 5
- Economic assessment: 6
- External assessment: 5
- Fiscal assessment – Flexibility and performance: 3
- Fiscal assessment – Debt burden: 4
- Monetary assessment: 4
Outlook: Positive
The positive outlook reflects our view that Togo will post high growth while pursuing budgetary consolidation and preserving adequate external buffers.
Downside scenario
We could revise the outlook to stable if Togo's economic growth prospects fall below our current forecasts, or if its external and fiscal metrics deteriorate.
Upside scenario
We could raise our ratings on Togo over the next 12 months if economic growth remains resilient, while budgetary outcomes improve.
Turkiye (BB-/Stable/B)
- Analyst: franklin.gill@spglobal.com
- Latest publication: Turkiye Upgraded To 'BB-' On Reserve Accumulation And Disinflation; Outlook Stable, Nov. 1, 2024
Rating score snapshot:
- Institutional assessment: 4
- Economic assessment: 4
- External assessment: 4
- Fiscal assessment – Flexibility and performance: 5
- Fiscal assessment – Debt burden: 4
- Monetary assessment: 5
Outlook: Stable
The stable outlook balances our expectation that the current economic team will persevere with tight monetary policy against the implementation risks associated with the government's medium term program.
Downside scenario
We could lower the ratings 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
We could raise the ratings should there be further progress on bringing inflation down closer to single-digit levels and restoring long-term confidence in the Turkish lira, and, more broadly, domestic capital markets. Evidence of this would include further de-dollarization of the share of foreign currency deposits in the Turkish banking system, and increased liquidity and depth of domestic capital markets, particularly for foreign exchange operations.
Uganda (B-/Stable/B)
- Analyst: leon.bezuidenhout@spglobal.com
- Latest publication: (Full Analysis) Uganda, Dec. 2, 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.
(Latest research update published on May 31, 2024)
Ukraine (SD/SD)
- Analyst: karen.vartapetov@spglobal.com
- Latest publication: Ukraine 'SD/SD' FC Ratings And 'CCC+/C' Local Currency Ratings Affirmed; Outlook Stable; New Eurobonds Rated 'CCC+', Sept. 13, 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:
We do not assign an outlook to our long-term FC rating on Ukraine, since the rating is 'SD'.
The stable outlook on the long-term local currency rating balances significant fiscal pressures against the government's incentives to service hryvnia-denominated debt to avoid distress to domestic banks, the primary holders of the government's local currency bonds.
Downside scenario
We could lower the local currency ratings if we see indications that hryvnia-denominated obligations could go unpaid or face restructuring.
Upside scenario
We could raise our long-term FC rating if Ukraine completes the restructuring of the remaining commercial debt, including rated GDP-linked securities. Our analysis will incorporate the sovereign's post-restructuring credit factors, including the new terms and conditions of its external debt.
We could raise the local currency ratings if Ukraine's security environment and medium-term macroeconomic outlook improve.
Uzbekistan (BB-/Stable/B)
- Analyst: Zahabia.gupta@spglobal.com
- Latest publication: Uzbekistan 'BB-/B' Ratings Affirmed; Outlook Stable, Nov. 29, 2024
Rating score snapshot:
- Institutional assessment: 5
- Economic assessment: 4
- External assessment: 4
- Fiscal assessment – Flexibility and performance: 6
- Fiscal assessment – Debt burden: 2
- Monetary assessment: 4
Outlook: Stable
The stable outlook balances Uzbekistan's favorable growth prospects over the next 12 months against risks from a continued increase in external and public sector leverage.
Downside scenario
We could lower the ratings if external and fiscal deficits weaken beyond our expectations due to less favorable terms of trade, persistently high government spending, or higher borrowing costs. We could also lower the ratings if growth levels slow significantly, for instance due to lower-than-anticipated benefits from debt-financed investment projects.
Upside scenario
We could raise the ratings if Uzbekistan moderates its budgetary and current account deficits without impairing economic performance significantly. We could also consider an upgrade if Uzbekistan's governance quality and institutional settings were to improve--for example, if governance gaps at government-related entities (GREs) narrowed.
Zambia (SD/SD)
- Analyst: leon.bezuidenhout@spglobal.com
- Latest publication: (Full Analysis) Zambia, Nov. 25, 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:
Our long-term foreign currency rating on Zambia is 'SD' (selective default). We do not assign outlooks to 'SD' ratings because they express a condition and not a forward-looking opinion of default probability.
We do not assign outlooks to issue ratings.
Upside scenario
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.
Primary Credit Analyst: | Benjamin J Young, Dubai +971 4 372 7191; benjamin.young@spglobal.com |
Secondary Contact: | Frank Gill, Madrid + 34 91 788 7213; frank.gill@spglobal.com |
Research Contributors: | Purnima Nair, CRISIL Global Analytical Center, an S&P affiliate, Mumbai |
Ashay Gokhale, CRISIL Global Analytical Center, an S&P affiliate, Mumbai |
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