Fiscal prospects for almost all sovereigns in the Middle East and Africa (MEA) have deteriorated sharply due to the COVID-19 pandemic, a Fitch report revealed.

“This mainly reflects the impact of a sharp decline in oil prices on public finances of oil exporters, and the effect of domestic and international containment measures in curtailing economic activity and thus fiscal revenues,” the global ratings agency said in its report.

The ratings agency expects most of the region to return to economic growth in 2021 and general government (GG) deficits to narrow consequently. Deficits will however remain wide in many countries, and debt will rise in most MEA sovereigns through 2021.

According to the ratings agency, buffers to absorb the shock have been limited in several cases, partly as a result of the weakening of public finances prior to the outbreak of the pandemic.

This has been reflected in Fitch’s decision to downgrade the ratings of 10 MEA sovereigns since the start of this year.

“In addition, the share of negative outlooks on sovereign ratings in the region - eight out of 33 - is higher than it was after the 2008 Global Financial Crisis or the 2014 oil-price shock, suggesting a high chance of further downgrades,” Fitch said.

(Writing by Gerard Aoun; editing by Seban Scaria)

(gerard.aoun@refinitiv.com)

#CORONAVIRUS #FITCH #MEA #UAE #SAUDI #EGYPT

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