Fitch Envisage Wider Fiscal Deficits for Sukuk Issuing-Nations due to Low Oil Prices and Other Economic Challenges

In the Global Sukuk Market Dashboard by Fitch Ratings, it was stated that Sukuk issuing-nations who are net-oil-exporters, such as the Gulf Cooperation Council (GCC) countries and Malaysia, are likely to experience wider fiscal deficits and increased borrowing requirements in future, given the slump in oil prices and large scale economic stimulus packages launched by governments to combat the Coronavirus.

Whilst low oil prices would certainly provide some benefit to Sukuk issuers who are net-oil-importers, such as Indonesia, such countries may still not be able to avoid budget pressures completely, due to the impact of lower commodity export prices and declined revenue from tourism.

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