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Fitch: 2015 Middle East & Africa Outlook - Oil Prices, Policies & Politics to Dominate
December 17, 2014 / 1:21 PM / 3 years ago

Fitch: 2015 Middle East & Africa Outlook - Oil Prices, Policies & Politics to Dominate

(The following statement was released by the rating agency) Link to Fitch Ratings' Report: 2015 Outlook: MEA Sovereigns here LONDON, December 17 (Fitch) Falling oil prices, the policy response of oil exporters, reform momentum and politics, will be the main influence on ratings in the Middle East and Africa (MEA) in 2015, says Fitch Ratings in its 2015 Outlook for the region. High oil prices have been one factor resulting in rating divergence in the region and this influence will now lessen as oil exporters come under pressure, while oil importers will benefit. Fitch forecasts Brent to average USD83/bl in 2015 after USD99/bl in 2014. This will not cause major headaches for the 'AA' rated Gulf oil producers - Abu Dhabi, Kuwait and Saudi Arabia - which have accumulated large buffers. However, it will increase pressure on Bahrain (BBB/Stable) and the sub-investment grade exporters in Africa - Nigeria, Angola and Gabon (all BB-). Fitch placed Gabon's rating on Negative Outlook in December. In contrast, lower oil prices will ease fiscal and external pressure on energy importers, especially in North Africa, where fuel is heavily subsidised. Morocco is in the lead reducing subsidies; Egypt surprised by reducing subsidies in 2014 and plans further cuts; Tunisia may follow suit once it has a government in place after end year elections. Most countries in sub-Saharan Africa are oil importers. Fitch believes oil exporters Angola and Nigeria have learnt lessons from the experience of 2008-2009 when substantial FX reserves were wasted supporting unsustainable exchange rates. Nigeria has responded by devaluing the naira and tightening fiscal and monetary policy. However, the currency will likely remain under pressure while oil prices remain weak and in the run-up to the February 2015 elections. Angola is entering 2015 with much stronger domestic and international reserves than 2008 and has been much less affected so far, although its budget deficit will increase. Ghana - rated 'B/Negative' due to persistent fiscal weakness - derives only 10% of its fiscal revenue from oil but will nevertheless come under increased pressure to bring its negotiations with the IMF to a swift and successful conclusion in 2015. Zambia (B/Positive) is also talking to the IMF and faces elections in the New Year. Maintaining the recently improved policy momentum will be key to its rating trajectory. Ethiopia and Cote d'Ivoire also each have important elections in 2015. 2014 showed that countries with consistently strong policy records reap the reward of higher ratings. Rwanda and Seychelles were both upgraded a second time to B+/Stable as a strong policy track record bought robust growth and a lower debt burden. Improved governance was also important in Rwanda. The Positive Outlooks on Cote d'Ivoire and Uganda reflect their good policy track records. The opposite is true in Cabo Verde and Ghana, where fiscal policy is weak, and South Africa where lack of structural reform is slowing growth potential and pressuring debt dynamics. The conversion of three Positive Outlooks to upgrades in 2014 means more of the region's ratings are now stable (71%). However, after placing Ghana, South Africa and Gabon on Negative Outlook, there are now slightly more Negative than Positive Outlooks. Contact: Richard Fox Senior Director +44 20 3530 1444 Fitch Ratings Limited 30 North Colonnade London E14 5GN MENA Paul Gamble Director +44 20 3530 1623 SSA Carmen Altenkirch Director +44 20 3530 1511 Media Relations: Athos Larkou, London, Tel: +44 203 530 1549, Email: Additional information is available at ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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