Mumbai, 11 March 2008

(Thomson Financial delivered by Newstex) -- Standard & Poor's (NYSE:MHP) Ratings Services affirmed its 'AA-/A-1+' sovereign credit ratings on the State of Qatar, and added these are supported primarily by strong fiscal surpluses, substantial external liquidity, healthy economic prospects and high per capita income.

The outlook is stable.

The ratings remain constrained, however, primarily by the geopolitical risks facing sovereigns in the Gulf region, and capacity and institutional constraints which are higher than for other 'AA' rated sovereigns, the agency said.

S&P expects Qatar's strong fiscal performance to continue, and projected a general government surplus of 7.6 pct of GDP in fiscal year 2008-09 against an expected surplus of 8.0 pct of GDP in 2007-08. General government debt is expected to be 7.4 pct of GDP at fiscal year-end 2008-09, it said.

Qatar will also benefit from a strong external liquidity position, driven mainly by increases in export receipts from oil and liquefied natural gas, with current account surpluses of 18-20 pct of the GDP forecast for 2008-11. Real economic growth, meanwhile, is expected to average 13.5 pct annually in 2008-09 and 10 pct in 2010-11, compared with an estimated 13.2 pct in 2007.

However, the rating agency warned that should inflation continue to rise into the medium-term, it would complicate Qatar's efforts to develop the services sector into which significant funds have been invested. But it added that near-term risks related to inflation are compensated by the high competitiveness of the hydrocarbon sector, based on very low production costs, labor costs in the non-oil sectors, and the weak US dollar.

'The stable outlook on Qatar balances the government's considerable success in continuing to foster improved economic and fiscal performances against serious regional geopolitical risks stemming primarily from continued tensions over Iran's nuclear activities,' the agency said.