Sovereign risk
Economic Recovery Road Map series, September 2026
Sixteen Sovereigns, One Scale
The Arab countries below investment grade — categories, scoring matrix, rankings and the population behind the numbers — Nicolas Photiades
- PDF, 33 pp.
Sixteen Sovereigns, One Scale — compendium
Consolidated edition of the series
This consolidated edition assesses sixteen Arab sovereigns rated below investment grade or unrated on a single scale. It reads each through five pillars, including a social-resilience pillar weighted at 15 of 100, and sets twenty-one threshold indicators. Morocco and Jordan sit in Category 1; eight sovereigns in Category 2; Libya and Somalia in Category 3; Lebanon, Syria, Yemen and Sudan fall beyond the scale.
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- PDF, 113 pp.
Sixteen Sovereigns, One Scale — complete edition
All sub-regional compendia and country road maps in one volume
The complete edition of the series brings together the general report, four sub-regional compendia (Levant and Mesopotamia, Arabian Peninsula, Horn of Africa and Red Sea, North Africa) and sixteen country road maps. It places each sovereign in one of three categories, or beyond the scale, using a five-pillar weighted scoring matrix, and sets out a sequenced economic recovery road map to each country's next category.
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- PDF, 9 pp.
Categorisation of Arab sub-investment-grade sovereigns
General report: three categories and the states beyond the scale
The general report sets out the framework: three categories defined by a sovereign's relationship to its own financing, a tier beyond the scale where state, central bank and bank balance sheets fail together, and five pillars with indicative thresholds derived from agency methodologies and peer medians. It argues that social resilience, covering food security, poverty, employment and gender equality, must move first for any category change to last.
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- PDF, 5 pp.
Restructuring a post-default and disabled economy
Lebanon’s road map from systemic collapse to speculative-grade Category 2 — revised and expanded edition
Revised and expanded edition of Lebanon’s economic recovery road map. It defines the three speculative-grade sovereign categories with quantified threshold indicators across four pillars, calibrated on rating-agency methodologies and on BB, B and CCC peers, positions Lebanon against each threshold, and sets out a measured path from systemic collapse to Category 2.
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- PDF, 27 pp.
The Levant and Mesopotamia
Sub-regional compendium and country road maps
Levant and Mesopotamia span the whole scale. Jordan sits inside Category 1; Iraq is a Category 2 sovereign held up by oil, which supplies 91% of exports, and held down by governance; Lebanon and Syria are both off the scale, the former an intact administration with a destroyed balance sheet, the latter a destroyed state with a light one. Since February 2026 a regional war has struck all four.
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- PDF, 17 pp.
The Arabian Peninsula
Sub-regional compendium and country road maps
This compendium covers the peninsula's two sub-investment-grade sovereigns. Bahrain, with GDP per capita near USD 29,000 but public debt at 148% of GDP and interest absorbing about a third of revenue, is Category 2 by fiscal arithmetic, sustained by GCC support. Yemen, with income per head near USD 470, blocked oil exports and some 18 million people in IPC Phase 3 or worse, is off the scale in both halves.
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- PDF, 39 pp.
North Africa
Morocco, Algeria, Tunisia, Egypt, Libya, Mauritania
This compendium covers Morocco, Algeria, Tunisia, Egypt, Libya and Mauritania, the series' largest and strongest sub-region. Morocco holds an investment-grade rating (BBB– at S&P); five of the six sit in Category 1 or 2; only Libya, with two governments, falls to Category 3, and none is off the scale. Shared constraints are water, wheat and youth: cereal import dependence, recurrent drought and youth unemployment of 30–50%.
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- PDF, 27 pp.
The Horn of Africa and the Red Sea
Sub-regional compendium and country road maps
This compendium covers Djibouti, Comoros, Somalia and Sudan, the Arab world's poorest sub-region, where no sovereign is rated and all have recently faced debt distress. Djibouti is a Category 2 rentier of geography with an unserviceable Chinese loan; Comoros is Category 2 because it owes almost nothing; Somalia is the Category 3 post-HIPC template; Sudan is off the scale amid civil war and famine.
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- PDF, 4 pp.
Post-default restructuring
Speculative-grade categories and the way out beyond the recovery plan
This issue considers post-default restructuring after the May 2022 elections and the hastily approved recovery plan. Placing Lebanon, in Selective Default since March 2020, at the bottom of the weakest speculative-grade category, it argues that recovery must first address electricity, food security, medication and hospitalisation, and depositors' money. It calls for exchange-rate unification, a renewable energy fund and central bank governance reform as the pound reached LBP38,000.
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Country road maps
- PDF, 5 pp.
Lebanon
Lebanon, beyond the scale after its March 2020 default, targets speculative-grade Category 2. Constraints are triple balance-sheet insolvency, a USD 80–83 bn financial gap and fractured governance. The road map completes IMF prior actions, restructures sovereign debt with depositors given priority, enforces bank resolution with losses allocated to shareholders first, overhauls Electricité du Liban, unifies exchange rates and abolishes the exclusive import-agency regime.
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- PDF, 5 pp.
Syria
Syria targets a move from post-war collapse to a Category 3 sovereign with a balance sheet. Constraints are institutional capacity, statistics and banks rather than solvency, with output between half and one-fifth of 2010 levels. The road map ratifies a constitution, integrates security forces, rebuilds statistics, puts power generation first, defines the recognised external-debt perimeter and caps central-bank advances to the Treasury.
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- PDF, 5 pp.
Iraq
Iraq seeks to consolidate Category 2 and reach Category 1 as a diversified borrower. Constraints are oil supplying nine-tenths of exports and revenue, governance in the bottom decile and a state-dominated banking system. The road map legislates the IMF non-oil revenue package, freezes hiring and audits payroll, adopts an oil-price fiscal rule with a stabilisation fund, builds non-Hormuz export routes and prohibits central-bank financing.
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- PDF, 4 pp.
Jordan
Jordan moves from the lower edge of Category 1 to its upper tier. Constraints are public debt of about 91% of GDP, flat for five years, unemployment of 21.4% and growth barely above population growth. The road map lifts revenue to 27% of GDP through the income-tax base, ends NEPCO and water losses with cost-reflective tariffs, sets a 1–2% primary surplus and funds a national employment compact.
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- PDF, 5 pp.
Egypt
Egypt, a programme-anchored Category 2, targets Category 1. Its binding constraints are interest absorbing about 60% of revenue, gross financing needs above 40% of GDP and revenue of 15–16% of GDP. The road map raises revenue to 20% by ending exemptions and taxing state enterprises, keeps a 3–3.5% primary surplus, lengthens domestic debt maturity, completes divestment with proceeds to debt, and prohibits central-bank overdraft financing.
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- PDF, 5 pp.
Morocco
Morocco moves from the top of Category 1 to investment grade at all three agencies. Its constraints are social rather than fiscal: youth unemployment of 37%, female participation of 15% and drought-driven cereal dependence. The road map converts the protest agenda into a social-spending scorecard, legislates a fiscal rule, prioritises desalination, adds aerospace and green-hydrogen exports, ring-fences World Cup spending and completes inflation targeting.
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- PDF, 5 pp.
Algeria
Algeria moves from a reserve-rich, deficit-monetising Category 2 towards Category 1. Its constraints are a deficit near 12% of GDP financed by the central bank, a 77% parallel-market premium and hydrocarbons at about 90% of exports. The road map cuts the deficit to 5% by 2029 through energy-price indexation and a wage-bill cap, sunsets central-bank advances, unifies the exchange rate and seeks a sovereign rating.
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- PDF, 5 pp.
Tunisia
Tunisia moves from a self-financed Category 2 back to Category 1. Constraints are no market issuance since 2019, a stalled IMF facility and direct central-bank financing of the deficit. The road map cuts the deficit from 6% to 3% of GDP over three years via the wage bill and a broader tax base, phases central-bank financing to zero by 2028 and restores an external anchor.
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- PDF, 5 pp.
Libya
Libya moves from a fragmented Category 3 to a unified Category 2. Its constraints are two governments financed by one central bank, fuel subsidies of 20–24% of GDP and a wage bill of 28%. The road map first unifies the government, budget, payroll and Treasury account, then cuts subsidies below 5% through a universal oil cash dividend, caps the wage bill at 15% and adopts a fiscal rule.
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- PDF, 5 pp.
Mauritania
Mauritania moves from an unrated Category 2 to a rated Category 1. Its numbers already meet most thresholds; constraints are the absence of market access, governance in the 20s, state-bank non-performing loans and 80% informality. The road map legislates a fiscal rule and sovereign fund for gas revenue, moves up the extractive chain, targets a sovereign rating and first market issue by 2029, and builds a strategic cereal reserve.
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- PDF, 5 pp.
Sudan
Sudan targets a move from off the scale to Category 3 as a post-conflict sovereign. Constraints are civil war, a cumulative output loss of about 40%, external debt of USD 45 bn in arrears and famine. With a ceasefire and single transitional authority as precondition, the road map formalises gold exports, revives Gezira agriculture, lifts revenue towards 12% of GDP, ends monetisation and seeks HIPC completion.
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- PDF, 5 pp.
Somalia
Somalia moves from a post-HIPC Category 3 to a revenue-bearing Category 2. Constraints are domestic revenue of 3–4% of GDP, contested federal politics with Puntland and Jubaland, and recurrent drought. The road map settles a federal compact, secures predictable AUSSOM financing, lifts revenue to 8% of GDP by 2030 through customs harmonisation, reintroduces the shilling with a dollar anchor and regulates mobile money as finance.
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- PDF, 5 pp.
Djibouti
Djibouti moves from a debt-distressed Category 2 to a sustainable Category 1. Constraints are external debt owed mainly to China Eximbank, with railway debt service suspended, thin reserves and weak governance. The road map formally restructures the railway and port loans, raises reserve cover to four months, ring-fences base rents in a stabilisation fund, lifts domestic revenue towards 16% of GDP and diversifies port clientele beyond Ethiopia.
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- PDF, 4 pp.
Comoros
Comoros moves from a Category 2 by absence of liabilities to a Category 2 by capacity, and towards Category 1. Its fiscal and external thresholds are met; constraints are domestic revenue of 11–12% of GDP, exports of 4% and single-digit government effectiveness. The road map lifts revenue to 15% through customs and VAT modernisation, launches a diaspora bond, develops spice processing, fisheries and geothermal power, and resolves the postal bank.
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- PDF, 5 pp.
Yemen
Yemen targets a move from a divided off-scale economy to a single Category 3 sovereign. Constraints are two central banks and currencies, oil exports blocked since 2022 and revenue of 5.6% of GDP. With a ceasefire as precondition, the road map pursues economic reunification under one central bank, resumes oil and LNG exports, lifts revenue to 12% of GDP and clears salary arrears through a donor trust.
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- PDF, 5 pp.
Bahrain
Bahrain, a GCC-guaranteed Category 2, targets Category 1 on its own balance sheet. Constraints are public debt of 148% of GDP rising towards 157%, interest absorbing a third of revenue and reserves under three months of imports. The road map legislates the revenue package, including 10% corporate income tax from 2027, sets a 4–5% primary surplus rule, formalises a standing GCC facility and directs Mumtalakat proceeds to debt reduction.
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