Latest news with #fiscalmanagement
Times of Oman
4 days ago
- Business
- Times of Oman
Experts hail S&P's upgrade of India's sovereign rating to BBB, calling it 'long overdue'
New Delhi: Economists and market experts have welcomed S&P Global Ratings' decision to upgrade India's sovereign credit rating from BBB- to BBB, terming it a recognition of the country's strong fundamentals, sound fiscal management, and growing global economic clout. In a significant boost to investor confidence, S&P Global Ratings has upgraded India's long-term unsolicited sovereign credit rating to 'BBB', while also raising the short-term rating to 'A-2' from 'A-3'. The outlook on the long-term rating remains stable, reflecting optimism around India's policy continuity, robust economic growth, and improved fiscal management. Alongside the rating upgrade, S&P also revised its transfer and convertibility assessment for India to 'A-' from 'BBB+', citing an improved monetary and external environment. According to S&P, the stable outlook suggests confidence in India's ability to sustain its growth trajectory, driven by high levels of infrastructure investment and a disciplined policy environment. The Ministry of Finance said the rating improvement "reaffirms that under Prime Minister Narendra Modi's leadership, providing stability, India's economy is truly agile, active, and resilient." It noted that India has kept fiscal discipline a priority while pushing infrastructure growth and inclusive development. These factors, it added, have played a key role in achieving the upgrade. The Finance Ministry stated that India will "continue its buoyant growth momentum and undertake steps for further reforms to attain the goal of Viksit Bharat by 2047," underscoring that the current direction of fiscal and economic policy will remain unchanged. Union Minister of Commerce & Industry, Piyush Goyal, also emphasised that India is prioritising fiscal consolidation, maintaining a strong infrastructure creation drive, and advancing an inclusive growth approach. "This is also a testament that at the heart of our journey towards Viksit Bharat lies our economic resilience and our government's unwavering commitment to ensure a better life for every Indian," he stated in a tweet. Sanjeev Sanyal, Member of the Prime Minister's Economic Advisory Council, called the upgrade "much required" and said his own assessment had suggested India deserved a higher rating. "I am pleased to hear that S&P has upgraded India's sovereign rating to BBB from BBB-. This was much required because, as I have said before, the difference between what the ratings were being given by the three big rating agencies and my own model suggested was a gap of two notches," Sanjeev Sanyal, Member of Prime Minister Narendra Modi's Economic Advisory Council. Sonal Badhan, Economist at Bank of Baroda, said the move would boost investor confidence and aid capital flows. "In both the short and long term, foreign capital inflows can be expected to be impacted positively, as the upgrade reaffirms trust in India's 'sound fundamentals' and 'growth momentum'. We are likely to see higher FPI inflows this year and a decline in bond yields," she noted. Rishi Shah, Partner & Economic Advisory Services Leader at Grant Thornton Bharat, described the decision as "long overdue," adding, "India's fundamentals were such that this rating upgrade should have happened before time. Our fiscal management and monetary management have been excellent since Covid, especially compared to the rest of the world." Manoranjan Sharma, Chief Economist, Infomerics Ratings, said, "It is a recognition of India's growing financial might and clout on the global scene. India has arrived on the global scene, and this is a fair recognition of the kind of influence India has, both economically and materially. This will also have an important implications for India, both at the level of macro economy, and also for case of companies, when we raise loans abroad, this improved rating will significantly lower the rate of interest on our loans and advances, and to that extent, it will be beneficial both to the Indian economy and also to a large number of firms who raise Money in the international market." Rishi Shah (Partner & Economic advisory services leader, Grant Thornton Bharat) on S&P upgraded sovereign rating of India from BBB- to BBB, "This is a positive development, long overdue. India's fundamentals were such that this rating upgrade should have happened before time. They have implemented changes slightly in a delayed fashion, especially since Covid, because our fundamentals have been improving since then. This is partly due to a drop in them because of COVID and the measures the government had to take. But more importantly, these need to be seen in a relative sense. How well have we done since COVID, as opposed to the rest of the world? I think our fiscal management and monetary management have been excellent. And that's why I think this rating is just a reflection of that." The rating upgrade is expected to improve India's appeal to global investors, reduce borrowing costs, and further strengthen its macroeconomic position amid global uncertainties. All four agencies consider India to be investment grade, though at the lower end of the scale. S&P's upgrade to BBB is the most notable recent change and signals increased confidence in India's fiscal and economic management. Moody's and Fitch continue with stable outlooks, reflecting both strengths (growth, resilience) and challenges (high debt levels, fiscal constraints). The Indian government has been critical of sovereign credit ratings methodology, as the Economic Survey of 2020-21 highlighted that it should be made more transparent, less subjective and better attuned to reflect economies' fundamentals. Recently, in a written reply to the Rajya Sabha, Minister of State for Finance Pankaj Chaudhary said the Government has made sustained efforts to strengthen India's overall economic outlook, thereby positively impacting its credit profile. These include maintaining sound macroeconomic fundamentals, such as steady growth, price stability, fiscal consolidation, a resilient external sector, robust foreign exchange reserves, a strong banking sector and enhancing physical and digital infrastructure to support investment.
Times of Oman
4 days ago
- Business
- Times of Oman
S&P Global upgrades India's sovereign rating to 'BBB' on strong growth, fiscal reforms
New Delhi: In a significant boost to investor confidence, S&P Global Ratings has upgraded India's long-term unsolicited sovereign credit rating to 'BBB' from 'BBB-', while also raising the short-term rating to 'A-2' from 'A-3'. The outlook on the long-term rating remains stable, reflecting optimism around India's policy continuity, robust economic growth, and improved fiscal management. Alongside the rating upgrade, S&P also revised its transfer and convertibility assessment for India to 'A-' from 'BBB+', citing an improved monetary and external environment. According to S&P, the stable outlook suggests confidence in India's ability to sustain its growth trajectory, driven by high levels of infrastructure investment and a disciplined policy environment. The rating agency noted that the government's efforts in fiscal consolidation, along with targeted spending, are helping reduce the weight of elevated debt and interest burdens over time. However, the agency warned that any backsliding on fiscal discipline or a material slowdown in structural economic growth could exert downward pressure on the ratings. Conversely, a further upgrade may be possible if India significantly narrows its fiscal deficit, bringing net general government debt additions below 6 per cent of GDP on a sustainable basis. India's economic momentum was central to the upgrade decision. Real GDP growth averaged 8.8 per cent between fiscal years 2022 and 2024 -- the highest in the Asia-Pacific region -- and S&P expects this strength to continue, projecting average growth of 6.8 per cent annually over the next three years. This strong growth, despite ongoing fiscal deficits, is helping to moderate the debt-to-GDP ratio. The agency said India's reliance on domestic consumption, which drives around 60 per cent of GDP growth, offers resilience against external shocks, including recent U.S. tariffs and changes in energy import sources. India's fiscal position, historically a weak point in its ratings profile, is showing signs of improvement. S&P noted a gradual consolidation path, projecting the general government deficit to shrink from 7.3 per cent of GDP in fiscal 2026 to 6.6 per cent by fiscal 2029. A key driver behind this fiscal improvement is a shift in government spending priorities. Over the past five to six years, budget allocations have increasingly favored capital expenditure. The Union Government's capex is set to reach INR 11.2 trillion -- about 3.1 per cent of GDP in fiscal 2026, up from 2 per cent a decade ago. Including spending by state governments, total public infrastructure investment now stands at about 5.5 per cent of GDP, putting India on par with or ahead of global peers. On the monetary policy front, reforms such as the shift to inflation targeting have paid off. Inflation expectations are better anchored, and consumer price inflation has averaged 5.5 per cent over the past three years -- well within the RBI's target range of 2 per cent-6 per cent. Recent data shows inflation hovering near the lower end of this band, despite global volatility in energy markets. S&P emphasized that India's rating is underpinned by a vibrant economy, a strong external balance sheet, and democratic institutions that contribute to policy stability and predictability. However, the country still faces structural challenges, particularly a high government debt burden, persistent fiscal deficits, and relatively low per capita income, which continue to weigh on its overall credit profile.
Reuters
27-06-2025
- Business
- Reuters
IDB approves $2 billion credit line for Brazil
June 27 (Reuters) - The Inter-American Development Bank (IDB) approved a conditional credit line of $2 billion to strengthen fiscal management in Brazil, it said on Friday. The funds will go toward modernizing the South American nation's tax management processes and systems, the lender said in a statement, starting with an initial $30 million loan for the state of Amazonas.
Malay Mail
04-06-2025
- Business
- Malay Mail
Govt to set up task force addressing serious financial irregularities, says Anwar
KUALA LUMPUR, June 4 — The government will be setting up a special task force to address serious financial irregularities to strengthen the credibility of the country's fiscal management, said Prime Minister Datuk Seri Anwar Ibrahim. In a post on his social media account, he said the decision was made during the Special Cabinet Committee on National Governance (JKKTN) meeting he chaired earlier yesterday. Anwar, who is also the Finance Minister, said that the committee had taken a serious view of the audit findings on financial irregularities as they could potentially affect the credibility of the country's fiscal management. 'In line with efforts to strengthen the role of the National Audit Department through amendments to the Audit Act 1957, the JKKTN agreed to establish a special task force to address serious financial irregularities,' he said, adding that this is to ensure more holistic, targeted, and effective response measures in accordance with the principles of accountability, transparency, and integrity. — Bernama
Arab News
27-05-2025
- Business
- Arab News
S&P affirms Abu Dhabi, RAK ratings on strong fiscal base
JEDDAH:Global credit rating agency S&P has reaffirmed Abu Dhabi's 'AA' rating and Ras Al-Khaimah's 'A' rating, citing robust fiscal management, infrastructure-led growth, and continued progress in economic diversification as key drivers of their sovereign credit standings. Abu Dhabi's rating was confirmed with a stable outlook, underpinned by what S&P describes as one of the strongest government balance sheets globally and ongoing initiatives to strengthen the emirate's non-oil economy. Ras Al-Khaimah's rating was similarly upheld, thanks to strong tourism-driven momentum and sustained investments in infrastructure. The UAE's overall economic performance further supports these ratings. According to S&P, the nation's gross domestic product rose by 3.8 percent year on year in the first nine months of 2024. The non-oil sector was the main contributor, expanding by 4.5 percent to 987 billion dirhams ($268.74 billion). As the capital, Abu Dhabi plays a central role in the UAE's macroeconomic profile. 'Abu Dhabi has a very wealthy economy, but growth rates remain volatile because about 50 percent of economic output comes from the hydrocarbon sector,' the report noted. Looking ahead, the agency forecasts the UAE's economy will remain resilient, projecting 2.5 percent growth in 2025. This outlook is driven by vigorous non-oil activity and increased oil production, with regional geopolitical tensions expected to have limited domestic impact due to the UAE's internal stability. S&P expects oil production to rise modestly over the medium term, supported by the relaxation of OPEC+ quotas. Output is anticipated to increase from 2.95 million barrels per day in 2023–24 to 3.04 million bpd in 2025, potentially reaching 3.50 million bpd by 2028. With a total capacity of up to 4.85 million bpd and new gas projects underway, the UAE holds significant upside potential for growth and fiscal surplus enhancement. The report emphasized Abu Dhabi's structural reforms aimed at improving the business climate and attracting foreign investment. These include the introduction of a law permitting 100 percent foreign ownership, liberalized personal and family laws, and the Golden Visa Program, which offers long-term residency to investors, entrepreneurs, and skilled professionals. Despite regional uncertainties, Abu Dhabi's economic outlook remains secure. A strategic asset in this stability is the Abu Dhabi Crude Oil Pipeline, which allows around half of the emirate's crude exports to bypass the Strait of Hormuz via the Fujairah Oil Terminal. Additionally, substantial fiscal reserves provide a critical buffer against potential financial shocks. S&P highlighted the emirate's fiscal and external strength, noting that while hydrocarbons account for 70 to 75 percent of government revenues, Abu Dhabi maintains one of the largest net asset positions among rated sovereigns, estimated to reach 327 percent of GDP by 2025. 'At the same time, the UAE government has pledged to make the country carbon neutral by 2050 and plans to invest heavily in alternative energy sources that are both renewable and clean,' the report added. Smaller emirates like Dubai, Ras Al-Khaimah, and Sharjah are also expected to benefit from federal financial backing, particularly from Abu Dhabi, if necessary. Their combined direct debt is projected to reach about 30 percent of Abu Dhabi's GDP by 2025. Even when accounting for government-related entity debt, Abu Dhabi's balance sheet is expected to remain in a net asset position above 100 percent of GDP. Due to limited external data specific to Abu Dhabi, S&P used UAE-wide figures to assess the emirate's external standing. The report pointed to significant external assets, primarily managed by the Abu Dhabi Investment Authority, as a core strength. The UAE's external liquid assets are forecast to exceed its external debt by roughly 215 percent of current account payments over 2025–28. However, gross external financing needs will remain relatively high, at 132 percent. The Central Bank of the UAE maintains a base interest rate of 4.4 percent, in line with the US Federal Reserve, due to the dirham's peg to the US dollar. Inflation rose slightly to 0.5 percent in 2024 and is expected to remain modest at 1.3 percent through 2028. Turning to Ras Al-Khaimah, S&P anticipates that economic growth will ease slightly to an average of 3.3 percent in 2025-26, down from an estimated 3.5 percent in 2024, due to less favorable external conditions. 'We expect RAK's fiscal performance to remain strong despite higher infrastructure spending in the next two to three years,' the report stated. RAK's growth is projected to accelerate to an average of 4.3 percent in 2027-28, driven by key sectors such as tourism, real estate, manufacturing, and mining. Conservative fiscal practices are expected to continue, with budget surpluses averaging 2 percent of GDP from 2025 through 2028. These surpluses are supported by stable revenues and limited debt, allowing RAK to maintain a net government asset position averaging 21 percent of GDP over the same period. Federal backing remains a financial safety net, easing any potential funding challenges. RAK posted a fiscal surplus of 2.9 billion dirhams in 2024 — 6.5 percent of its GDP — primarily driven by strong dividends from state-owned firms like RAK Ports and Marjan, solid municipal revenues, and reduced capital spending. Land sales from Marjan are expected to continue supporting fiscal performance, with additional revenues from corporate taxes and hospitality anticipated from 2027 onward. However, fiscal surpluses may moderate as infrastructure spending rises. S&P concluded that both Abu Dhabi and Ras Al-Khaimah are well-positioned to weather global economic uncertainties. Abu Dhabi's deep fiscal reserves and mature capital markets complement RAK's targeted tourism investments and expanding non-oil economy—together reinforcing the UAE's broader strategy of economic diversification.
