♠ Posted by Emmanuel in Africa at 3/21/2009 05:39:00 PMPicture this: a country whose leader was not so long ago synonymous with terrorist activity is now a near-shining model of economic rectitude, while its historical antagonist the United States is a basket case whose currency the community of nations will soon suggest others flee from. How time change, eh? From MarketWatch:
[Standard & Poor's] assigned Libya A- long-term and A-2 short-term foreign and local currency ratings, citing the strength of its balance sheet. The ratings agency assigned the sovereign rating following a request from Libya's government, said David Beers, global head of sovereign ratings at Standard & Poor's, in a phone interview with MarketWatch.At this point, Moammar could teach Barack a thing or two--especially about socialism.
"I think it's fair to say that their motivation to ask for the rating is in keeping with the broader philosophy of recent economic reforms," Beers said. "The rating is useful in terms of helping the country attract more foreign investment. Unsurprisingly, the focus of investor interest has been overwhelmingly in the oil and gas sector," Beers said. Other sectors that will likely draw investors are banking and tourism, he said.
Located in North Africa, Libya has the largest proven oil reserves in Africa. A member of the Organization of Petroleum Exporting Countries, it also holds vast reserves of natural gas. Its leader, Moammar Gadhafi, has been in power since 1969...
S&P assigned a stable outlook on Libya's ratings. "The ratings on Libya are supported primarily by what we consider is one of the strongest balance sheets among A-rated sovereigns, comprising substantial public assets and negligible debt, relatively low financial contingent liabilities, and the solid medium-term growth prospects of the country's energy sector," said Standard & Poor's credit analyst Ben Faulks in a statement...
S&P expects the sharp fall in oil prices and OPEC-driven cuts in production to cause a significant contraction of Libya's real and nominal gross domestic product this year. However, due to its strong balance sheet, Libya is well-equipped to confront likely fiscal and current account deficits and to moderate what could otherwise be a significant shock to the economy, S&P said.
The country's medium-term growth prospects are "promising," and international oil companies have demonstrated great interest in Libya, attracted by low production costs and the fact that some 75% of the country remains unexplored, the agency said. Infrastructure is underdeveloped following years of international isolation.
"The main constraint on the ratings on Libya is our belief that decision-making is more centralized and the political process more complex than in many A-rated peers, leading to less predictability in policy-making," S&P said.