BNP - Energy Price Shock Scenarios 31oct2014

This publication is classified as non-objective research
Energy price shock scenarios: Impact on EM ratings,

funding gaps, debt, inflation and fiscal risks
The stronger US dollar is having an inverse impact on dollar-denominated commodity

prices, including oil. This will affect emerging market (EM) credit quality in various ways.
We analyse the impact of a crude oil price shock for debt repayment risks for 32 EM oil
producers and 53 importers under various scenarios.
The implications of reduced recycled petrodollars has significant ramifications for

financial markets, loan markets and Treasury yields. In fact, we estimate that EM energy
exporters will post their first net drain on global savings (USD8bn) in eighteen years.
Our country-by-country analysis addresses changed industrial production costs, the

effects of improved household consumption given consumer demand elasticities
prevalent across countries, trade gains and losses as well as the impact of tax receipts
and oil and gas subsidies on fiscal balances.
While most EM economies will benefit from lower energy import costs they will export
less to slower growing oil producing countries. So, oil prices at USD 80/bbl will prove
somewhat negative for EM overall, shaving a forecast 0.4pp from EM GDP growth in 2015.
The current account surplus will fall 0.6pp to 0.9% of GDP and the EM budget deficit will
drop by 0.60pp to -2.7%. Asia and EM Europe look to fare best from a fiscal and economic
perspective, while the Middle East and CIS will fare worst.
Oil and gas exporting EMs account for 26% of total EM GDP and 21% of external bonds.
For these economies, the impact will be on lost fiscal revenue, lost GDP growth and the
contribution to reserves of oil and gas-related export receipts. Together, these will have a
significant effect on sustainability and liquidity ratios and as a consequence are negative
for dollar debt-servicing risks and credit ratings.
We calculate that oil and gas subsidies will amount to USD 394bn (1.18% of collective
GDP) this year across 85 EMs. Lower costs will provide some offset for the fiscal and
repayment risks associated with falling energy prices. In addition to Venezuela, we
identify 12 other EMs (including Saudi Arabia, Egypt, Iraq, Algeria and Ecuador) which
could fully make annual external debt service payments and yet still be left with a sizeable
annual surplus were they to fully reform their oil and gas subsidies.
Overall EM credit quality will not be impaired. But, a sustained USD 80/bbl oil price would
push Middle East and CIS credits down a half-notch, while lifting EM Europe by a halfnotch. Here, the Czech Republic, Slovakia and Slovenia will see the best upgrade
potential, with Turkey next. Bulgaria is a laggard, as lower energy costs will not benefit
consumption or corporate profits so much. Asia would benefit most, enjoying a full
ratings notch upgrade, with Korea and Singapore faring best.
Markets are forward looking and the oil shock may already be priced in. We examine
market activity since 30 June 2014 for 55 sovereigns and assess appropriate valuations
under various oil-shock scenarios. Gabon, Angola and Azerbaijan appear rich, in a
sustained USD 80/bbl environment. Slovenia, Ivory Coast, Kenya and Croatia are cheap.
It is important to stress that our analysis does not account for potential fiscal or monetary
policy adjustments as a result of changed energy costs and GDP growth. The following
analysis is based on EM Strategy research estimates and forecasts and does not
necessarily reflect the view of BNP Paribas fundamental analysts.
I.
Defining the scope of the issue and implications for recycled petro dollars (2-4)
II.
Energy exporters
a.
External Funding Gap and debt repayment risk analysis (pages 5-7)
b.
Oil revenues, fuel subsidies, breakeven prices and government budgets

(page 8)
c.
Oil and gas subsidies (pages 8-10)
d.
Impact on inflation and growth for energy exporters (pages 11-13)
III.
Net importing EMs: Oil price scenarios and economic impact (pages 14-15)
IV.
The big picture: Impact on EM as a whole (pages 16-17)
V.
The impact of oil volatility on EM credit ratings (pages 18-21)
VI.
Have markets appropriately priced in the risks? (pages 22-24)
David Spegel Global Head of EM Sovereign & Credit Strategy

London +44 207 595 8195
31 October 2014
1
www.GlobalMarkets.bnpparibas.com
The impact of the energy

price drop will be wideranging and will have
implications for credit
ratings and risk premiums
Whatever the reason, whether a function of supply, demand or political risks, oil prices
plummeted in Q3 2014 and remain volatile. Theories related to the price plunge vary widely:
some argue it is an additional means for Western allies in the Middle East to punish Russia.
Others state it is the result of a price war between Opec and new shale oil producers. In the
end, it may just reflect the traditional inverted relationship between the international value of the
dollar and the price of hard-currency-based commodities (Figure 6). In any event, the impact of
the energy price drop will be wide-ranging (if sustained) and will have implications for debt
service costs, inflation, fiscal accounts and GDP growth.
CPI
Budget/GDP
Source: BNP Paribas strategy desk analysis and forecasts
The implications for

financial market liquidity
via the reduced recycling
of petro dollars should not
be underestimated
0.47
1.49
1.3
0.38
1.25
1.1
0.30
0.99
0.8
0.19
0.80
0.6
0.08
0.59
0.4
0.34
0.2
0.06
-2.4
0.5
-0.53
-0.65
USD80/bbl
China
CIS
Middle East
Latam
Africa
EM Europe
USD70/bbl-0.98
-1.29
-0.52
-0.58
USD85/bbl
USD95/bbl
Asia ex-China
USD75/bbl -0.78
-1.00
-0.44
-0.43
USD90/bbl
-0.25
-0.15
-0.01
-0.10
-1.5
USD100/bbl
Global EM
-1.0
0.0
-0.11
0.0
-0.5
Africa
CIS
EM Europe
Latam
CAB % GDP
1.5
1.0
-3.8
GDP growth
China
Asia ex-China
Energy-importers
Energy exporters
-6.0
2.0
Ratings in CIS fare worst, unless oil prices

remaing below USD85/bbl, in which case it is
the Middle East. Asia ex- China looks best on
the ratings front.
0.12
-1.0
-0.4
-0.6
-0.6
-3.6
-1.5
-1.1
-0.4
-0.7
-0.7
0.0
-1.7
-5.0
Middle East-5.3
-4.0
-1.9
-2.3
-3.0
-1.9
-2.7
-2.0
-0.1
0.0
-1.0
Figure 2: Impact of oil price at USD 80/bbl on EM credit

ratings (1 = one notch)
0.5
0.7
0.0
0.3
0.4
1.0
0.5
0.6
0.1
0.4
0.6
Figure 1: Impact of oil price at USD 80/bbl on 2015

forecast fundamentals
Global EM
Analysis reflects impact of oil at USD 80/bbl averaged over 3Y compared with
its prior average of USD 105/bbl. Oil price standardised at Brent in all analyses.
Based on 85 EM economies.
Source: BNP Paribas strategy desk analysis
Have you noticed a reduction of financial markets liquidity?

Outside from the domestic economic impact within EMs due to the downward oil price shock,
we believe that the implications for financial market liquidity via the reduced recycling of petro
dollars should not be underestimated. Because energy exporters do not fully invest their export
receipts and effectively save a considerable portion of their income, these surplus funds find
their way back into bank deposits (fuelling the loan market) as well as into financial markets and
other assets. This capital has helped fund debt among importers, helping to boost overall
growth as well as other financial markets liquidity conditions.
Last year, capital flows from energy exporting countries (see list in Figure 12) amounted to
USD812bn (Figure 3), with USD109bn taking the form of financial portfolio capital and
USD177bn in the form of direct equity investment and USD527bn of other capital over half of
which we estimate made its way into bank deposits (ie and therefor mostly into loan markets).
Of course, these economies were also received capital, so the net benefit
For the first time in 18

years, we expect EM
energy exporters will be
net importers of world
savings. They will no
longer be adding
incremental demand for
US Treasuries and FM
assets, thereby removing
an element downward
pressure on UST yields as
well as FM liquidity.
The recycling of petro-dollars has benefited financial markets liquidity conditions. However, this
year, we expect that incremental liquidity typically provided by such recycled flows will be
markedly reduced, estimating that direct and other capital outflows from energy exporters will
have declined by USD253bn YoY. Of course, these economies also receive inward capital, so
on a net basis, the additional capital provided externally is much lower. This year, we expect
that net capital flows will be negative for EM, representing the first net inflow of world savings
(USD8bn) for the first time in eighteen years. This compares with USD60bn last year, which
itself was down from USD248bn in 2012. At its peak, recycled EM petro dollars amounted to
USD511bn back in 2006. The declines seen since 2006 not only reflect the changed global
environment, by also the propensity of underlying exporters to begin investing the money
domestically rather than save. The implications for financial markets liquidity - not to mention
related downward pressure on US Treasury yields is negative.

London +44 207 595 8195
31 October 2014
2
Figure 3: EM energy exporter outward capital flow USDbn

400
300
200
Figure 4: EM energy exporter C/A balances USDbn

600
The recycling of petro-dollars has benefited

financial markets liquidity conditions.
However, this year, we expect that financial,
direct and other capital outflows from energy
exporters will have declined by USD253bn
YoY.
The declining Current Account surpluses among

energy exporters indicates that petro dollar
recycling will be reduced.
500
400
300
100
200
0
100
-100
0
2012
-200
CIS
Asia -ex Japan
Middle East
2014f outward portfolio flows
2014f outward direct investment
2014f other capital flows
YoY estimated decline
2013
2014f
2015f
-100
Latin America
-200
CIS
Asia -ex Japan
Middle East
Latin America
Figure 5: Annual net exported savings by EM energy exporters USDbn

On a net basis, we expect that recycled petro
money into global bank lending markets and
financial markets will drop by USD68bn YoY.
600
500
For the first time in eighteen years, we estimate

that energy exporting EMs will be net importers
of capital over the next two years, assuming oil
prices remain depressed.
400
300
200
100
0
CIS
AsiaexJapan
MiddleEast
2015f
2014f
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
100
LatinAmerica
Defining the scope of the issue

Oil and gas producing EMs
make up 48% of EM GDP
and 20% of global GDP
Emerging market net exporters of oil and gas represent 11% of world GDP (Figure 6), 26% of
EM GDP and 9% of gross outstanding EM external debt (Figure 7). EMs for which oil and gas
are significant domestic industries, but are still net importers, represent a further 22% of EM
GDP. Together with the net exporters, this means oil and gas producing EMs account for nearly
The drop of crude prices will
half of EM GDP. As related export receipts provide an important source of hard currency
have a negative impact on
revenue to service debt and build central bank reserves, the fall in the crude oil price threatens
the ratings momentum of
servicing capacity and consequently the credit ratings of a significant proportion of EMs.
several EMs
but the bulk of EMs will
enjoy a boost to
disposable income with
74% of EMs current
accounts benefiting,
improving debt servicing
potential
That said, it is worth bearing in mind that over half of EMs stand to benefit from reduced energy
costs which will provide a boost to household disposable income. Furthermore, note that 91% of
outstanding external debt (including EM tradable bonds) relates to economies that are net
importers of oil and gas. Thus, most EMs debtors will benefit from a boost to current account
balances, which will improve debt servicing potential.
This picture is different when isolating external bonds only (Figure 9). With the heavy reliance
on debt capital markets for funding, typical of many energy net exporters, the picture for
marketable hard currency bonds is somewhat less positive. As seen in Figure 9, USD 213bn
(8%) of outstanding securities are related to oil exporting sovereigns and USD 329bn (13%) to
energy-producing corporate issuers. This means that 21% of the external bond universe faces
negative oil-price-related credit pressure. Were we to add the 4% metals and commodities
corporate sector (which is typically driven by similar dynamics), than the proportion increases to
a quarter of marketable debt.

London +44 207 595 8195
31 October 2014
3
Figure 6: Value of USD and oil prices

150
140
The improved international value of the US dollar is having

an inverse impact on dollar denominated commodity prices,
including oil.
Figure 7: World GDP breakdown (2013)

70
72
74
120
76
110
78
100
80
90
82
80
84
70
86
60
88
50
90
Jan-08
May-08
Sep-08
Jan-09
May-09
Sep-09
Jan-10
May-10
Sep-10
Jan-11
May-11
Sep-11
Jan-12
May-12
Sep-12
Jan-13
May-13
Sep-13
Jan-14
May-14
130
WTI USD/bbl (lhs)
DXY trade weighted dollar (rhs)
DXY scale inverted. Source: Bloomberg
EM Energy
importers
23%
USD17tr
EM Oil & Gas

exporters
11%
USD8.3tr
USD43tr
Developed
57%
USD6.8tr
EM Oil
producers but
net importers
9%
Source: World Bank and BNP Paribas strategy desk
Figure 8: EM gross external debt outstanding

(% of total EM external debt)
Oil & Gas
exporters
8%
Oil producer but
net importers
30%
USD649bn
USD2.5tr
Figure 9: Universe of external bonds by sector

(for end Q3 2014)
Soft
Construction Other Transportatio
3%
com&agric
n
2%
2%
2%
Consumer
3%
Real estate
4%
USD638bn
Telecom
4%
Utilities
4%
Sovereign
oil&gas net
importers
24%
Sovereign
oil&gas net
exporters
8%
USD213bn
USD3.9tr
USD703bn
USD329bn
Energy
importers
62%
Bank/finance
27%
Source: National sources and BNP Paribas strategy desk
Figure 10: USD 80bbl: lost exports as

percentage of current account receipts and GDP
Metals &
commodities
4%
Energy
13%
Source: BNP Paribas strategy desk
Figure 11: Cost per barrel USD/bbl

(finding plus lifting cost)
40
35
30
25
20
15
10
5
Iran
Iraq
Angola
Azerbaijan
Nigeria
Gabon
Saudi Arabia
Venezuela
Ecuador
Kazakhstan
Algeria
Colombia
Libya
Oman
Kuwait
Brunei
Russia
T&T
UAE
Mexico
Tunisia
Egypt
Ivory Coast
Ghana
Bahrain
Brazil
Malaysia
Argentina
% C/A receipts
Arctic
Brazil Ethanol
Central and South A
Deepwater Offshore
EU Biodiesel
EU Ethanol
Middle East Onshore
North Sea
Oil Sands
Former Soviet Union
Russia Onshore
US Ethanol
US Shale Oil
WAF Offshore
Lower cost Upper cost Avg cost

115.0
122.0
118.5
63.0
69.0
66.0
29.0
35.0
32.0
54.0
60.0
57.0
106.0
113.0
109.5
98.0
105.0
101.5
10.0
17.0
13.5
46.0
53.0
49.5
89.0
96.0
92.5
18.0
25.0
21.5
15.0
21.0
18.0
80.0
87.0
83.5
70.0
77.0
73.5
38.0
44.0
41.0
% GDP
Source: BNP Paribas strategy estimates
Source: Reuters

London +44 207 595 8195
31 October 2014
4
Energy exporters: External Funding Gap and debt repayment risk analysis
Determining the impact on EM debt repayment and general economic risks related to energy
price volatility is complicated by the fact that finding and lifting costs vary depending on the
quality of crude, the extraction method and its location. These are summarised in Figure 11
which we use in our analysis in Figure 12. The table also shows the percentage of offshore
production as this is often one of the most costly to explore and lift. Figure 10 ranks EM
economies by lost export revenues as a percentage of current account receipts (CAR) and
shows that Iran, Iraq and Angola will suffer the greatest export losses relative to 2014 forecast
export receipts. Still, the impact on GDP may not necessarily correspond to the ranking (Figure
10) as energy production does not always enjoy similar weights among more diverse and
closed economies.
Figure 10 reveals the economies that are most likely to suffer reduced export earnings resulting
from a decline of oil prices from the USD 105/bbl averaged in recent years to USD 80/bbl.
However, it does not properly address the risks associated with debt repayment. We attempt to
better reflect these in Figure 15. Here, we show our expectation of the current account balance
under a USD 80/bbl oil price scenario, the lost export revenue associated with the oil price
decline (Column A) and the expected external funding gap (B) under that assumption. This
includes total payments on currently maturing long-term debt (CMLTD), short-term debt
principal, and interest on LT and ST debt as well as the expected current account balance
(CAB) under the prior USD 105/bbl oil price assumption. In the following Column C, we show
the external debt service (EDS). This represents the amount of principal payments on CMLTD
as well as interest on ST and LT debt (the figure does not include ST debt principal). We view
reserves (D) as the available hard currency insurance funds available in the country.
Subsequent columns (E, F, G and H) represent various risk ratios.
Figure 12: Lost export revenue analysis

Key oil-related statistics (most recent available)
Algeria
Angola
Argentina
Azerbaijan
Bahrain
Brazil
Brunei
Colombia
Ecuador
Egypt
Gabon
Ghana
Iran
Iraq
Ivory Coast
Kazakhstan
Kuwait
Libya
Malaysia
Mexico
Nigeria
Oman
Qatar
Russia
Saudi Arabia
T&T
Tunisia
UAE
Uzbekistan
Vietnam
Yemen
Venezuela
Totals
Proven
reserves
(million bbl)
12,200
10,470
2,805
7,000
125
13,150
1,100
2,200
8,240
4,400
2,000
660
154,600
141,400
100
30,000
104,000
48,010
4,000
10,260
37,200
5,500
25,380
80,000
267,900
728
425
97,800
594
4,400
3,000
297,600
Oil
produced
'000/bpd
1,125
1,750
505
871
48
2,225
122
968
559
625
309
98
2,800
3,100
37
1,573
2,890
500
521
2,497
2,200
983
727
10,530
9,600
81
62
2,800
70
336
129
2,471
1,377,247
53,112
Oil
capacity
'000/bpd
1,200
1,870
------556
---3,500
3,650
--3,250
1,550
--2,400
-780
-12,500
--300
---3,000
Cost of production USD/bbl
Oil
exported Oil imported
'000/bpd
'000/bpd
1,097
6
1,750
0
91
0
821
0
48
256
619
344
122
0
778
0
413
154
85
49
225
0
33
32
2,445
16
2,390
0
32
50
1,406
120
1,395
0
500
0
269
161
1,460
0
2,200
0
705
0
727
0
4,720
16
6,880
0
75
70
62
4
2,142
0
0
0
188
0
175
0
1,645
0
35,499
1,277
Onshore
costs
35.00
35.00
45.00
21.50
25.00
66.00
42.97
42.97
35.00
0.00
35.00
35.00
21.50
25.00
35.00
25.00
38.31
40.82
25.00
25.00
15-21
25.00
42.97
35.00
27.00
25.00
25.00
39.45
35.00
Oil profits (ex-tax)
Offshore
costs % offshore
0.00
40.00
68.57
0.00
0.00
0.00
52.00
80.90
23.00
100.00
0.00
0.00
40.00
60.00
40.00
100.00
40.00
94.99
0.00
0.00
40.00
100.00
52.50
10.00
23.00
7.00
40.00
15.00
40.00
38.39
63.00
75.00
67.12
52.45
0.00
23.00
90.00
35-70
3.00
40.00
23.00
76.42
95.00
40.00
30.00
40.00
55.00
0.00
45.00
100.00
0.00
76.42
5.00
40.00
19.00
Lost export revenue USDbn
105
90
80
70
90
80
% of
GDP
% of total
exports
70
28.76
42.55
11.07
26.55
1.40
31.69
3.65
21.93
12.67
15.29
7.34
2.40
71.59
79.26
0.88
46.19
84.59
12.65
14.13
43.93
40.49
28.72
21.72
330.63
268.41
0.90
1.56
72.46
2.05
7.35
3.78
57.49
22.60
32.96
8.30
21.78
1.14
28.71
2.99
16.63
9.60
11.87
5.64
1.86
56.25
62.28
0.68
37.57
68.76
9.91
11.27
30.25
28.43
23.34
17.74
272.94
215.82
0.45
1.22
57.12
1.66
5.51
3.07
43.95
18.49
26.57
6.46
18.60
0.96
20.58
2.54
13.09
7.56
9.59
4.51
1.50
46.02
50.95
0.54
31.83
58.20
8.08
9.37
21.13
20.40
19.75
15.08
234.48
180.75
0.16
0.99
46.89
1.41
4.29
2.60
34.93
14.38
20.18
4.61
15.42
0.79
12.46
2.09
9.56
5.52
7.31
3.39
1.14
35.79
39.63
0.41
26.08
47.65
6.25
7.47
12.01
12.36
16.16
12.43
196.02
145.69
-0.14
0.76
36.66
1.15
3.06
2.12
25.90
6.01
9.59
0.50
4.50
0.26
0.83
0.67
4.26
2.26
0.47
1.23
0.18
13.40
13.09
0.18
7.70
7.64
2.74
1.47
8.00
12.05
3.86
3.98
25.86
37.69
0.41
0.34
11.74
0.00
1.03
0.96
9.01
10.02
15.98
0.83
7.50
0.44
3.09
1.11
7.10
3.77
0.78
2.06
0.30
22.33
21.82
0.29
12.84
12.74
4.57
2.46
13.33
20.09
6.44
6.64
43.10
62.82
0.69
0.57
19.56
0.00
1.72
1.60
15.02
4.71
12.87
0.14
10.19
1.34
0.14
1.96
1.88
4.02
0.29
10.70
0.62
6.08
14.61
0.92
5.54
7.25
6.97
0.78
1.06
3.85
8.35
3.28
2.06
8.39
2.48
1.21
4.86
0.00
1.01
3.96
2.07
14.68
22.56
0.98
21.75
2.12
0.67
8.74
12.10
14.80
3.13
21.04
2.23
36.47
23.72
2.27
14.72
11.37
11.87
1.06
3.59
21.47
11.45
52.27
8.37
16.69
5.35
3.25
5.30
0.00
1.33
23.90
16.37
14.02
22.37
1.16
10.50
0.61
5.35
1.56
9.94
5.28
1.09
2.88
0.42
31.26
30.55
0.41
17.97
17.83
6.39
3.44
18.66
28.12
9.01
9.29
60.34
87.95
0.96
0.80
27.38
0.00
2.40
2.24
21.03
1,394.08
1,112.30
918.31
724.32
191.93
321.59
2.71
8.97
451.25
Italicised production costs represent estimates. Brazil oil production costs are for onshore ethanol.
Source: OPEC, EIU, IEA, National sources and BNP Paribas strategy estimates

London +44 207 595 8195
31 October 2014
5
Lost revenue relative to

reserves gives a quick
view of the crisis relative
to external insurance
resources
The simplest measure of the potential cost related to cheaper oil is the ratio of lost export
revenue as a percentage of available reserves. Here, Gabon appears the most negatively
affected, followed by Venezuela, Ecuador and Kazakhstan (Column E in Figure 15).
Column F reveals the extent (nominal USD bn) to which reserves are able to provide a buffer
against next years total external funding gap, given the lost revenues assumed in our USD
80/bbl oil price scenario. The net amount is normalised versus GDP in Column G. This will need
to be funded by additional loan/bond issuance, FDI, financial portfolio flows, ST debt and other
capital flows.
while a better analysis

ranks risk by external debt
service payments
Column H reveals an alternate risk measure using 2015 external debt service needs
(Column C) versus the total external funding gap. We prefer this measure due to the heavy
distortion resulting from using ST debt in the external funding gap, and countries in Figure 15
are ranked using this measure: the ones at the top are least at risk while the ones at the
bottom are most at risk. (We have not calculated the external funding needs for Angola, Libya
and Brunei which we show at the bottom of the ranking.)
Column H shows that the implications of potential lost hard currency revenues are more
negative for Kazakhstan, Ivory Coast, Ecuador and Gabon, more easily seen in Figure 14.
Venezuela is actually sixth from the bottom with lost revenues and debt payments exhausting
reserves without any external funding. Other EMs, including Argentina, Egypt and Nigeria, will
retain positive foreign currency assets after accounting for lost exports and external debt
service. The best positioned are Malaysia, Trinidad and Tobago and Russia. None of these
would need to tap external markets for funds, although they would see a drain on their hard
currency resources.
Figure 13: Lost export revenue as a

percentage of reserves
Figure 14: Incremental external

funding required
100
100
90
Relative to reserves, lost export revenue at

USD80/bbl looks worse for Gabon,
Venezuela and Ecuador...
80
70
80
...But, a more appropriate assessment of risk

would be to examine lost export revenue relative
to the ability of an economy to raise hard currency
revenue to meet its 2015 external refunding
requirement.
60
60
40
50
40
20
30
20
10
Adequate resources
Assumes drop from USD 105/bbl average to USD 80/bbl in 2015

Source: BNP Paribas strategy estimates
Foreign funding required
-20
Brazil
Iran
T&T
Russia
Malaysia
Colombia
Mexico
Nigeria
Ghana
Egypt
Azerbaijan
Oman
Iraq
Argentina
Tunisia
Qatar
Kuwait
UAE
Venezuela
Gabon
Ecuador
Bahrain
Ivory Coast
Kazakhstan
Gabon
Venezuela
Ecuador
Iraq
Kazakhstan
Azerbaijan
Nigeria
Ivory Coast
Kuwait
Oman
UAE
Iran
Bahrain
Colombia
Qatar
EM total
Russia
Saudi Arabia
Tunisia
Mexico
T&T
Ghana
Algeria
Egypt
Argentina
Malaysia
Brazil
D-A+B % of GDP
D-A+C % of CAR
See Figure 15 for corresponding codes. CAR = Current Account Receipts

Ranked by (Reserves Lost Revenue & Debt Service)/CA Receipts
Source: IMF and BNP Paribas strategy estimates

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6
Figure 15: 2015 forecast external funding risk analysis (USD bn) with oil at USD 80/bbl
versus USD 105/bbl (ranked by Column H)
A
C/A bal @
USD80/bbl
Algeria
-9.20
Saudi Arabia
33.11
Brazil
-89.93
Iran
3.84
T&T
12.17
Russia
33.41
Malaysia
14.72
Colombia
-20.84
Mexico
-35.63
Nigeria
-3.65
Ghana
-5.26
Egypt
-9.80
Azerbaijan
2.48
Oman
-2.14
Iraq
-7.61
Argentina
-3.49
Tunisia
-4.85
Qatar
34.97
Kuwait
51.75
UAE
24.66
Gabon
-1.53
Ecuador
-4.70
Bahrain
0.99
Venezuela
-9.14
Ivory Coast
-1.78
Kazakhstan
-10.77
Angola
3.38
Libya
Brunei
Totals
-8.21
Lost
export
revenue
10.02
62.82
3.09
22.33
0.69
43.10
2.46
7.10
13.33
20.09
0.30
0.78
7.50
6.44
21.82
0.83
0.57
6.64
12.74
19.56
2.06
3.77
0.44
15.02
0.29
12.84
15.98
4.57
1.11
296.61
B
Total
external
funding
required
-0.94
17.47
-184.84
20.61
0.29
-60.32
-38.48
-41.24
-149.17
12.12
-7.57
-18.72
7.54
-1.69
9.88
-22.26
-13.05
7.25
39.29
-6.40
0.13
-4.71
-1.56
-16.07
-2.87
-22.78
C
External
debt
service
(USDbn)
-0.56
-13.21
-72.68
-0.86
-0.42
-83.00
-9.65
-18.31
-62.37
-1.09
-1.19
-4.84
-2.69
-0.87
-4.59
-11.90
-3.12
-16.67
-6.52
-22.41
-0.36
-3.93
-2.62
-11.12
-1.78
-25.15
-478.10
-381.89
Lost
Reserves revenue%Re
recent
serves
193.99
5.16
749.10
8.39
374.01
0.83
87.14
25.62
10.82
6.36
454.70
9.48
127.30
1.93
44.14
16.09
187.80
7.10
46.41
43.29
5.24
5.69
16.90
4.59
16.66
45.00
18.64
34.55
42.60
51.23
27.87
2.98
7.18
7.91
42.47
15.63
34.83
36.57
73.00
26.79
2.35
87.49
6.69
56.38
2.18
20.09
21.34
70.39
0.75
39.24
27.74
46.28
31.72
107.62
2,621.83
11.31
D-A+B (in
USDbn)
183.03
703.75
186.08
85.42
10.42
351.28
86.37
-4.20
25.30
38.43
-2.63
-2.60
16.70
10.51
30.66
4.78
-6.44
43.08
61.38
47.04
0.43
-1.80
0.19
-9.75
-2.41
-7.87
D-A+B %
of GDP
77.92
91.54
8.18
19.69
37.90
17.07
25.98
-1.05
1.92
6.64
-6.82
-0.93
21.56
13.42
11.81
0.96
-12.97
19.36
34.46
11.01
1.90
-1.78
0.58
-1.92
-6.57
-3.57
D-A+C %
of CAR
244.07
166.33
93.33
61.55
75.53
48.30
36.58
23.89
22.54
20.45
19.83
17.80
17.06
16.22
15.98
15.01
13.75
13.61
11.26
6.44
-0.75
-2.92
-3.14
-5.17
-8.08
-9.75
1,847.12
16.11
46.81
CAR = Current Account Receipts

A. Represents lost export revenue due to crude price decline from H1 2014 average from USD 105/bbl to USD 80/bbl. No
assumption is made for sensitivity of domestic crude price basket to global prices. Assumes no change of volumes.
B. External bonds and loans and ST debt due in 2015 plus current account balance.
C. External bonds and loan principal and interest and ST debt interest payments (not principal)
D. Most recent central bank reserves.
"D-A-B" = column D minus A minus B. This is the additional amount of external financing required due to reduced export
profit.
Source: IMF, National sources and BNP Paribas strategy estimates and forecasts

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31 October 2014
7
Oil revenues, breakeven prices and government budgets

Aside from the external public and corporate debt repayment risks associated with the balance
of payments dimension outlined in the section above, volatility of energy prices has implications
for government budgets, corporate profits, inflation and economic growth.
Among oil producing EMs,
in the main, prices need to
exceed USD 100/bbl for a
balanced fiscal account
Among economies where oil revenues account for more than 50% of budget revenues (Figure
16 and Figure 20 for details), in the main, breakeven oil prices for a balanced account exceed
USD 100/bbl. The budgets of Iraq (97%), Bahrain, Libya, Saudi Arabia (90%) and Kuwait (83%)
are heavily reliant on oil and gas receipts. However, budget deficits are not overly large in these
cases and so there is probably capacity to finance the oil price decline, adjust expenditure or
raise alternative sources of revenue.
In the case of Venezuela, because oil-related revenues account for just 61% of the budget,
prices need to be significantly higher to balance the anticipated USD 51bn shortfall next year.
Indeed, prices would need to be at USD 198/bbl in order for oil prices alone to fully balance the
forecast 2015 budget. Even were oil revenues 100% of budgetary income, prices would still
need to be about USD 160/bbl in order to produce a balanced budget. Similarly, the breakeven
price of oil is high in Colombia (USD 165/bbl) and Mexico (USD 241/bbl), where oil-related
receipts represent 33% of income.
Economies with a high

reliance on oil receipts
and with fiscal deficits will
be most exposed to
negative credit rating risks
Ranking EMs by forecast 2015 budget balances, as seen in Figure 17, helps to reveal those
with existing budget deficits; those more reliant on oil receipts will face greater funding needs
and negative credit-rating pressure. This is the case for Venezuela, Angola, Bahrain and
Nigeria.
Figure 16: Oil and gas proceeds as percentage of total government revenue and
breakeven oil price (USD bbl) needed for a balanced budget
100
90
80
70
60
50
40
30
20
10
0
...Oil prices mostly need

to be higher than
USD100/bbl to contribute
to a balanced account.
200
180
160
140
120
100
80
60
40
20
0
Iraq
Bahrain
Libya
Saudi Arabia
Kuwait
Angola
Oman
Algeria
Nigeria
Azerbaijan
Gabon
Yemen
Venezuela
Qatar
Iran
T&T
UAE
Kazakhstan
Mexico
Russia
Ecuador
Colombia
Malaysia
Vietnam
Egypt
Argentina
Ghana
Tunisia
Brazil
Among economies where

oil revenues account for
more than 50% of the
budget....
Oil&gas revenue % of govt receipts (lhs)
Breakeven oil price needed to balance budget (rhs)
National oil reference prices standardised to Brent. Source: BNP Paribas strategy desk forecasts
Oil and gas subsidies

represent over 8% of
energy producing EMs
collective budget
Oil and gas subsidies

Oil and gas subsidies among EM energy producers total around USD 296bn, representing
2.46% of GDP and 9.2% of the sum of the budgets for these economies (Figure 20). These
subsidies were implemented for a variety of reasons and are most prevalent among oilexporting economies as these typically have ample oil revenue to finance energy-related
subsidies. Among low-income EMs, these subsidies provide a fiscal tool which more rapidly
benefits households than do other welfare benefits. In other cases, they are a means by which
authorities strive to avoid the transmission of energy price shocks to their economy.
Unfortunately, such policy tools tend to be long lasting as their removal tends to have an equally
rapid negative impact of disposable income, which quickly becomes highly unpopular.

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31 October 2014
8
Furthermore, the longer subsidies remain in place, the more opposition to their removal
becomes entrenched.
Figure 17: 2015 forecast budget balance/GDP and oil and gas receipts
as a percentage of total government revenue
Among EMs, with existing budget deficits,
those more reliant on oil receipts will face
greater funding needs and negative creditratings pressure.
30
25
120
100
20
80
15
10
60
5
40
0
-5
20
-10
0
Kuwait
UAE
Qatar
Brazil
Iraq
Libya
Saudi Arabia
Yemen
Brunei
Uzbekistan
Russia
Colombia
Gabon
Iran
Kazakhstan
Argentina
Algeria
T&T
Azerbaijan
Nigeria
Oman
Mexico
Ivory Coast
Malaysia
Angola
Ecuador
Vietnam
Bahrain
Tunisia
Ghana
Venezuela
Egypt
-15
Budget balance/GDP (lhs)
Oil&gas revenue % of govt receipts (rhs)
Oil prices standardised to Brent. Source: BNP Paribas strategy desk forecasts
While the oil price decline

negatively impacts
revenues, there is also a
positive impact on
expenditure due to lower
subsidy costs
Although, on a nominal basis, fuel subsidies are highest in Saudi Arabia (Figure 18), the burden
relative to the government budget is greatest for Egypt, Iran, Bahrain, Nigeria and Ghana.
Consequently, while the oil price decline negatively impacts revenues, there is also a positive
impact on expenditure, because of falling subsidy costs. We reflect this in our final fiscal
analysis seen in Figure 20.
a few producing EM
countries therefore benefit
from the oil price fall
Some producing EM countries therefore benefit from the oil price fall. Yemen, Egypt and Libya
will all benefit from reduced subsidy costs as a result of the oil and gas price declines. Still, the
benefits are not enough to lift related budgets into surplus.
The energy price decline

will provide EM
governments with room to
lower subsidy costs
Fortunately, the energy price decline will provide EM governments with room to lower subsidy
costs. Already, Ghana announced in July that it would cut its GHS85m weekly energy subsidy
(after having reinstated it early this year in April). Venezuela has also flagged cuts. Meanwhile,
Omans government recently stated that it is likely to begin reducing some state subsidies in
2015, according to Minister for Financial Affairs Darwish Al-Balushi. As with many other EMs,
Oman has been trying to find a way to reform its costly and often wasteful subsidy system,
which is a politically sensitive process. (In our following analysis of the economic cost of oil price
shocks, Oman stands out as one of worst impacted from a budget balance perspective.)
Oil and gas subsidies accounted for 16.9% of Venezuelas budget in 2012, amounting to
USD 24.2bn. We estimate these to have increased to USD 30bn this year. Were these to be
eliminated, the government would be able to fully pay all sovereign and PDVSA debt service for
2015 (totalling USD 11bn) and still be left with USD 19bn to spare. If oil prices were to remain at
USD 80/bbl (Brent), then our estimate of lost export revenue totalling USD 15bn for Venezuela
(seen in Figure 12) suggests that the amount left over would drop to USD 4bn in 2015.
Other countries where fuel subsidy reform would allow governments to fully fund external debt
service (principal on CMLTD and interest payments on LT and ST debt) include Saudi Arabia
(at the top of the list, left with USD 42.5bn after full external debt payments), Egypt
(USD 16.1bn), Iraq (USD 13.5bn), Algeria (USD 11bn), Iran (USD 8.4bn), Nigeria (USD 5.4bn),
Ecuador (USD 2.7bn) and others in Figure 21.

London +44 207 595 8195
31 October 2014
9
50
40
$56
30
$21
$9
$4
$6
$1
10
$30
20
Although on a nominal basis, fuel

subsidies are highest in Saudi Arabia,
relative to the government budget, the
burden is greatest for Egypt, Iran,
Bahrain, Nigeria and Ghana...
...Consequently, while the oil price
decline negatively impact revenues,
there is also a positive impact on
expenditures owed to falling
subsidies costs.
$12
$18
$1
$7
$8
$19
$2
$8
$2
$14
$25
$6
$0
$18
$2
$0
$1
$4
$0
60
Figure 19: Budget impact of oil at USD 80/bbl and related

2015 forecast fiscal balances (% GDP)
Egypt
Iran
Bahrain
Nigeria
Ghana
Saudi Arabia
Venezuela
Algeria
Iraq
T&T
Ecuador
Malaysia
UAE
Angola
Kuwait
Azerbaijan
Qatar
Russia
Argentina
Gabon
Mexico
Kazakhstan
Ivory Coast
Vietnam
Brazil
Colombia
Fuel subsidy % govt revenue
30
25
The contribution of reduced oil revenues to the fiscal

account pressures Oman, Angola, Saudi and Iraq most
severely.
20
15
10
5
0
-5
While the contribution to Venezuela's deficit is relatively

less severe, the overall negative balance is nevertheless
the worst among EM producers.
-10
-15
Kuwait
UAE
Brazil
Qatar
Yemen
Libya
Iran
Russia
Argentina
Colombia
Nigeria
Kazakhstan
Malaysia
Ivory Coast
T&T
Mexico
Ecuador
Gabon
Vietnam
Algeria
Azerbaijan
Iraq
Saudi Arabia
Tunisia
Ghana
Bahrain
Egypt
Angola
Oman
Venezuela
Figure 18: Oil and gas

government subsidies
Impact 80/bbl on fiscal balance % GDP
Oil & gas subsidies USDbn
For oil & gas subsidies only. Data excludes subsidies for coal and electricity.
Source: IEA, IMF and BNP Paribas strategy desk estimates
Forecast 2015 fiscal balance % GDP oil at 80bbl
Source: BNP Paribas strategy desk estimates
Figure 20: Forecast budget risk analysis for EMs in 2015 (subsidies, oil revenue and breakeven prices)
Fiscal implications 2015f
Algeria
Angola
Argentina
Azerbaijan
Bahrain
Brazil
Brunei
Colombia
Ecuador
Egypt
Gabon
Ghana
Iran
Iraq
Ivory Coast
Kazakhstan
Kuwait
Libya
Malaysia
Mexico
Nigeria
Oman
Qatar
Russia
Saudi Arabia
T&T
Tunisia
UAE
Uzbekistan
Vietnam
Yemen
Venezuela
Totals
Oil&gas
production % Oil&gas % of
of GDP C/A receipts
18.37
63.22
48.53
94.74
3.88
22.76
43.11
96.89
5.75
8.90
3.75
18.55
8.24
36.70
9.27
63.24
21.23
84.14
8.55
96.61
52.65
121.21
9.73
28.08
24.75
175.41
45.80
129.24
3.87
10.95
27.39
69.15
62.23
98.96
29.27
49.87
6.01
8.66
7.25
25.82
14.59
90.19
48.14
67.06
12.53
219.54
19.62
78.42
47.89
97.84
11.34
24.25
4.81
13.66
25.13
29.11
4.73
18.01
6.89
9.98
12.26
74.02
18.66
103.25
17.14
56.82
Impact of oil delcline on fiscal bal % GDP
Oil&gas
contribution to
budget %
Oil & gas

subsidies
USDbn
Fuel
subsidy %
GDP
Fuel subsidy %
govt revenue
70.00
79.00
7.19
64.00
91.00
3.12
-15.00
19.00
10.00
64.00
6.00
50.00
97.00
10.00
39.00
83.00
91.00
14.00
33.00
70.00
77.00
53.00
28.00
90.00
44.00
5.00
40.00
0.28
13.00
63.00
61.00
34.84
11.60
1.65
6.31
2.09
3.73
3.95
0.60
0.47
6.62
20.99
0.12
1.29
9.30
18.04
0.31
1.90
8.26
2.84
8.30
18.29
6.46
2.48
13.50
24.77
55.69
1.42
4.94
1.19
1.26
2.70
11.64
0.17
1.06
0.12
6.55
7.49
0.55
3.35
2.14
6.95
0.85
0.86
4.64
4.33
2.50
1.39
1.12
3.16
6.07
1.20
7.24
5.16
-4.51
19.36
0.32
9.03
5.94
2.46
15.19
9.60
5.59
8.91
41.44
0.46
-0.39
16.58
49.27
5.49
18.28
41.65
19.52
3.04
4.79
8.04
-11.88
5.90
30.20
6.64
6.52
5.76
20.12
14.92
-13.18
-1.40
-21.05
9.20
19.26
11.00
0.60
3.65
30.15
295.66
2015f budget components in USDbn
USD90/bbl
USD80/bbl
USD70/bbl
Revenues
Expenditures
Balance
-2.54
-4.05
-0.05
-2.38
-1.55
-0.14
-4.24
-6.75
-0.09
-3.97
-2.58
-0.24
-5.94
-9.45
-0.12
-5.56
-3.61
-0.33
75.96
51.47
112.23
23.35
7.87
846.84
79.93
56.56
120.67
24.81
9.69
811.52
-3.97
-5.09
-8.44
-1.46
-1.82
35.32
-0.62
-0.14
0.85
-2.20
0.29
-0.34
-3.94
-0.17
-0.88
-6.59
0.00
-0.04
-0.91
-0.21
-4.78
-1.62
-0.66
-3.59
-1.17
-0.18
-1.31
-1.03
-0.23
1.42
-3.66
0.49
-0.56
-6.57
-0.28
-1.47
-10.99
1.03
-0.07
-1.52
-0.35
-7.97
-2.71
-1.11
-5.99
-1.96
-0.30
-2.18
-1.44
-0.32
1.99
-5.13
0.68
-0.79
-9.19
-0.39
-2.05
-15.39
0.00
-0.10
-2.12
-0.49
-11.16
-3.79
-1.55
-8.39
-2.74
-0.43
-3.06
117.59
39.70
42.39
5.58
8.33
38.86
91.95
7.34
39.44
108.45
120.77
43.92
71.96
5.82
11.29
44.04
89.89
8.66
42.07
65.74
-3.19
-4.22
-29.56
-0.25
-2.96
-5.18
2.07
-1.31
-2.63
42.71
66.16
308.74
21.29
37.09
72.84
427.97
275.37
8.32
12.64
145.39
78.07
349.47
33.38
38.96
62.65
436.16
275.37
8.84
15.95
123.71
-11.91
-40.73
-12.09
-1.87
10.18
-8.19
0.00
-0.52
-3.31
21.68
-0.38
0.00
-1.61
-1.00
-0.64
2.15
-2.68
-1.64
-0.90
0.00
-3.76
-2.34
43.12
51.67
-8.55
142.51
3,178.80
193.55
3,275.13
-51.04
-96.33
Breakeven
price to
balance
budget
118.88
115.13
-112.23
---165.43
214.35
-108.43
-115.18
103.11
-116.79
56.01
105.00
-241.00
126.59
111.80
32.27
112.64
105.00
144.98
-51.73
-105.00
198.18
112.64
All national oil reference prices standardised in Brent terms. Oil and gas contribution to budget: Algeria '11; Angola '11; Argentina taxes profits at 30% and taxes
exported oil at 100% when priced above USD 70/bbl (up from USD 42/bbl before 2013); Azerbaijan '11; Bahrain '11; Brazil tax rate 34%; Colombia '13; Ecuador '11;
Egypt '10; Gabon '10; Iran '10; Iraq '11; Kazakhstan '10; Kuwait '10; Malaysia '11; Mexico '11; Russia '10; Saudi '11; T&T '11; Tunisia '12; Nigeria '11; Ghana '11;
Venezuela includes FONDEN transfers 20% between USD 55-88/bbl, 80% when USD 80-100/bbl, 90% when USD 100-110/bbl and 95% when above USD 110/bbl.
Tax of 30% PDVSA production is included; Vietnam '11; Yemen '11
Subsidy numbers exclude electricity and coal subsidies and are for oil and gas subsidy costs only. Subsidies are estimated for 2014 based on related costs specified
in 2012 budget IEA data for subsidies data except for Angola, Bahrain, Brazil, Ghana, Ivory Coast, Iran, Oman, Qatar, T&T, Tunisia, Vietnam, Yemen and Kuwait.
2015 forecast (f) budget balance based on USD105/bbl oil price. All analyses assume no FX adjustment.
Impact of oil price declines on fiscal balance as a percentage of GDP includes impact of price changes on subsidy costs.
Source: EM Strategy desk estimates and forecasts

London +44 207 595 8195
31 October 2014
10
Figure 21: 2014 estimate oil and gas subsidies versus

2015 forecast of total public and private external debt service (USD bn)
Countries more easily able to
service debt via subsidy reform.
Countries requiring more than subsidy

reforms (ie more foreign funding).
1.0
1.6
1.1
1.7
1.7
In many cases, annual oil and gas subsidy costs are

multiples of annual external debt service payments. Since
these are typically paid for by the hard-currency revenue
earned on energy exports, even a small reduction of
subsidies can allow for full funding external debt.
5.4
11.0
10
8.4
20
16.1
19.0
30
13.5
40
2.7
42.5
50
0.1
60
Argentina
-5.6
Qatar-3.2
Vietnam
-4.2
Tunisia-3.1
UAE-3.1
Ivory Coast-1.5
2015f external debt service
Malaysia -1.3
T&T
Ghana
Oman
Bahrain
Kuwait
Oil & gas subsidies USDbn
Angola
Nigeria
Ecuador
Iran
Algeria
Iraq
Egypt
Venezuela
Saudi Arabia
-10
Gabon -0.2
Azerbaijan -0.6
Differential
Source: BNP Paribas strategy desk calculations
Impact on inflation and growth for energy exporters

Our growth impact analysis includes the following vectors:
Household consumption benefits: While we recognise that the relationship is not

entirely linear, we use inflation basket weights for transportation and household &
utilities (shown in the Economic components section of Figure 27) as a means to
address the differing demand elasticities prevalent across countries. These act as our
proxy for consumption the consumption basket in order to determine the economic
benefit that would result as lower energy prices improve household disposable income.
This is weighted by the level of domestic consumption relative to the economy, which
we also show in the Economic components section of Figure 27.
Reduced industrial production costs: Outside the energy industry, manufacturers

will benefit from falling operating costs. Agriculture will not benefit as much and
services will benefit even less.
Trade gains and losses: Lost trade as a result of lower demand from oil-producing
trade partners will impact both growth and the current account balance. On the other
hand, better consumption from many energy-importing trade partners will provide
some offset. The percentage of each countrys exports to energy producing partners
represents relative to its total exports is used to determine potential lost growth and
CAR due to lower demand from trade partners.
Domestic FX moves are beyond the scope of our analysis. These will be tied to the
level of openness of the economy and the impact of changed demand conditions
among trade partners as well as dollar effects. Neither do we address non-oil related
political risks (eg sanctions) or any fiscal or monetary policy responses to oil shocks.
GDP growth
The least impacted oil producing country, from a GDP perspective, is Brazil followed by Mexico,
Argentina, Tunisia and Trinidad & Tobago. The impact on fiscal accounts also appears lower for
these than most other EMs.
Remarkably, the impact of lower oil for Russias economic growth is not as severe as might be
expected. Sustained oil at USD80/bbl would see growth slow by 1.8pp to -1.0%. This compares
with the worst hit economies of Angola (where growth is nearly 5.6pp lower at -0.1%), Iraq
(GDP slows to -1.6% from 4.5% growth), Kazakhstan and Azerbaijan (growth falls to -2.7% from
4.0%).
London +44 207 595 8195
31 October 2014
11
In some cases - like with the

UAE, Qatar and Kuwait - the
negative GDP impact can
comfortably be offset with fiscal
stimulus.
10.0
5.0
0.0
-5.0
-10.0
In other cases - as with Oman, Angola, Ghana

and Venezuela - the negative fiscal balance will
limit the counterbalancing policy choice.
-15.0
0.0
-2.0
-4.0
-6.0
-8.0
-10.0
-12.0
-14.0
-16.0
Brazil
Mexico
Argentina
Tunisia
T&T
Egypt
Russia
Malaysia
Bahrain
Ivory Coast
Vietnam
Colombia
UAE
Venezuela
Totals
Algeria
Ghana
Saudi
Kuwait
Qatar
Oman
Nigeria
Ecuador
Azerbaijan
Kazakhstan
Iraq
Angola
-20.0
Figure 23: Oil price change and impact on CPI inflation
Impact on GDP
Our model-based
forecasts do not take into
account a potential fiscal
policy response
50.0
40.0
The inflation decline should
benefit economies with already
high inflation rates like Brazil,
Argentina and Venezuela.
30.0
20.0
10.0
0.0
Impact on CPI inflation (lhs)
Est 2015f fiscal balance/GDP
* Reflects the change of GDP growth rates year-on-year due to a decline of

Brent oil from USD 105/bbl to USD 80/bbl.Source: BNP Paribas strategy desk
60.0
Ivory Coast
Azerbaijan
Oman
Bahrain
Saudi
UAE
Colombia
Mexico
Malaysia
Totals
Algeria
T&T
Ecuador
Kuwait
Qatar
Gabon
Iraq
Tunisia
Kazakhstan
Vietnam
Brazil
Angola
Russia
Egypt
Nigeria
Ghana
Iran
Argentina
Venezuela
Figure 22: Oil price change and impact on GDP*

15.0
Expected 2015f inflation at USD105/bbl (rhs)
Source BNP Paribas strategy desk calculations
For a drop to USD 80/bbl, it can be seen (in Figure 27) that, in some cases, such as the UAE,
Qatar and Kuwait, the negative impact on GDP can be comfortably offset by fiscal stimulus.
These economies will probably benefit from such a policy in which case our model-based GDP
growth estimate would represent the low end of the likely outcome (unless a fiscal policy
response is not forthcoming).
Inflation
In Figure 27, we use the inflation basket weights associated with household and utilities as well
as transportation to help estimate the impact of the oil price change on inflation. While food
prices vary across EM economic income levels, the housing and utilities and transportation
basket weights are more consistent across income groups (Figure 26). This said, it is interesting
to note that energy price volatility is less meaningful for low income EMs than it is for other
income groups.
Meanwhile, on the inflation front, EM economies will largely benefit from the oil price decline.
Economies with already high inflation rates, such as Brazil, Argentina and Venezuela, will
benefit the most (Figure 23).
Current Account
Already sporting a negative CAB/GDP, it is good to see that Brazils deficit will not be extended
in our USD80/bbl oil price scenario, as can be seen in Figure 25. The impact on Ghanas deficit
is negligible, as is the case with Ivory Coast, Tunisia, Mexico and Colombia.
However, Venezuelas surplus will be pressured into a slight deficit (-1.82%), requiring greater
external funding. Much worse off appears to be Angola, whose healthy surplus (6.2% of GDP in
a USD105/bbl oil environment) will be pressured deeply into the red (-4.09%). Gabon, Iraq,
Oman and Kazakhstan will all post CAB/GDP deficits. Although Azerbaijans CAB will drop
nearly 10pp, it will remain in surplus at 3% of GDP.
Figure 24: Impact on Current Account Balance/GDP

In some cases - like with the
UAE, Qatar and Kuwait - the
negative GDP impact can
comfortably be offset with fiscal
stimulus.
15.0
10.0
5.0
Figure 25: Impact on Budget Balance/GDP

15
10
5
0.0
-5.0
-5
Fortunately, the fiscal toll for

Egypt, Ghana and Tunisia will
not be severe given their
existing deficits.
Even with the heavy toll on the

budget, Kuwait will still be in
good shape.
-10
-15.0
Brazil
Mexico
Argentina
Tunisia
T&T
Egypt
Russia
Malaysia
Bahrain
Ivory Coast
Vietnam
Colombia
UAE
Venezuela
Totals
Algeria
Ghana
Saudi
Kuwait
Qatar
Oman
Nigeria
Ecuador
Azerbaijan
Kazakhstan
Iraq
Angola
-20.0
In other cases - as with Oman, Angola, Ghana

and Venezuela - the negative fiscal balance will
limit the counterbalancing policy choice.
Impact on GDP
Est 2015f fiscal balance/GDP
* Reflects the change of GDP growth rates year-on-year due to a decline of

Brent oil from USD 105/bbl to USD 80/bbl.Source: BNP Paribas strategy desk
-15
Egypt
Ghana
Malaysia
Argentina
Ecuador
Brazil
Ivory Coast
Tunisia
Nigeria
Iran
Vietnam
Colombia
Russia
Kazakhstan
Mexico
Totals
T&T
UAE
Bahrain
Venezuela
Qatar
Gabon
Azerbaijan
Algeria
Saudi Arabia
Iraq
Angola
Oman
Kuwait
-10.0
Impact on fiscal balance
New 2015f fiscal balance/GDP
Source BNP Paribas strategy desk calculations

London +44 207 595 8195
31 October 2014
12
Fiscal accounts
As evident in Figure 25, even with the heavy toll on the budget, Kuwait will still be in good
shape, expected to register a 13% budget surplus next year even were oil prices to remain
depressed. The picture is also good for a number of other EMs, like Ghana, Ecuador and
Tunisia, where the already highly negative budget deficit will not come under added pressure.
Egypts fiscal accounts will even benefit from the oil drop.
Unfortunately, the likes of Oman, Angola, Iraq and even Saudi Arabia will see their budget
balances forced into deficit or see these extended negatively.
Figure 26: EM inflation basket weights by income group
50
45
40
35
30
Although food price shocks are more relevant in EM, particularly

among lower income economies, energy price shocks feed
through strongly in household utilities and transportation costs.
This has greater impact among upper-middle income and high
income EMs.
25
20
15
10
5
0
Developed
EM High income
Upper-middle income
Lower-middle income
Lower income
Source: National sources and BNP Paribas estimates
Figure 27: Oil price economic impact scenarios for key forecast 2015 EM credit indicators
Inflation weights %
Economic components
Househ
Househol % exports GDP
old & Transpo Agricult Industry/ Services d consum to energy growt
utilities rtation ure/GDP
GDP
/GDP
% GDP
credits
h
Algeria
4.90
16.50
7.20
62.50
30.30
32.89
10.80
3.3
Angola
6.71
12.51
6.96
37.27
53.46
52.05
4.20
5.5
Argentina
4.90
16.50
8.10
31.10
60.80
66.68
35.60
0.3
Azerbaijan
6.71
12.51
5.50
61.40
33.20
42.22
8.40
4.0
Bahrain
10.14
17.03
0.30
46.90
57.20
38.30
36.70
3.6
Brazil
4.00
18.81
6.10
26.50
67.40
62.62
22.90
1.2
Brunei
10.14
17.03
6.82
36.44
52.62
22.70
1.00
1.7
Colombia
4.90
15.20
8.90
38.10
53.00
61.01
26.10
4.7
Ecuador
6.08
13.60
6.80
32.60
62.60
58.96
18.10
4.6
Egypt
3.58
6.69
14.60
20.50
18.90
81.17
15.80
3.5
Gabon
4.90
16.50
3.70
62.10
34.10
58.00
18.40
6.1
Ghana
5.03
6.51
21.30
29.20
49.50
64.23
13.10
5.9
Iran
6.71
12.51
8.60
41.10
50.20
45.02
3.20
2.0
Iraq
6.71
12.51
9.40
59.90
28.20
58.37
7.10
4.5
Ivory Coast
5.03
6.51
28.10
21.40
50.60
73.56
12.80
6.3
Kazakhstan
4.90
8.40
5.90
41.60
51.30
51.23
17.40
5.2
Kuwait
10.14
17.03
0.30
48.20
51.50
22.13
7.40
2.8
Libya
5.03
6.51
7.20
62.50
30.30
22.88
5.00
16.7
Malaysia
4.10
14.90
8.90
42.30
48.80
50.97
9.00
5.2
Mexico
5.19
12.71
4.20
33.60
62.30
67.18
10.50
3.8
Nigeria
5.03
6.51
31.80
31.70
36.50
72.14
14.70
6.9
Oman
4.99
22.19
1.40
48.00
50.60
39.11
9.00
4.2
Qatar
12.34
12.03
0.10
82.30
17.60
12.45
3.20
6.9
Russia
6.10
12.10
4.00
33.80
62.10
51.99
6.70
0.8
Saudi Arabia
11.00
16.00
2.70
60.40
36.90
29.39
8.20
4.2
T&T
10.14
17.03
0.50
15.20
84.30
43.65
9.20
2.6
Tunisia
6.71
12.51
10.60
34.70
54.80
66.87
6.70
3.7
UAE
10.14
17.03
0.90
51.20
47.90
49.75
13.30
4.5
Uzbekistan
6.71
12.51
5.90
41.60
51.30
56.30
19.00
6.4
Vietnam
8.70
8.90
19.60
40.50
39.80
63.17
9.80
5.8
Yemen
5.03
6.51
10.60
34.70
54.80
69.42
16.10
2.2
Venezuela
5.40
11.20
4.20
30.80
65.00
59.27
5.90
0.5
Totals
5.7
12.5
7.0
37.7
54.1
55.3
13.4
2.9
USD105/bbl
CAB
%
GDP
0.3
6.2
-0.5
12.9
4.5
-3.8
23.5
-3.4
-0.9
-3.2
2.4
-11.8
6.0
5.5
-4.0
0.9
36.2
1.4
5.2
-1.7
2.8
5.5
11.5
3.7
12.5
8.9
-8.6
10.3
2.5
4.7
-6.8
1.2
2.4
CPI
2.5
7.5
25.0
1.5
2.9
6.3
1.0
2.9
3.5
10.2
3.0
15.1
18.0
3.2
1.1
6.8
3.2
14.0
3.2
3.9
8.6
2.0
3.5
7.5
3.0
4.3
5.9
2.5
13.0
5.0
8.5
63.0
9.2
USD90/bbl
Budge
t/GDP
-1.7
-3.7
-1.7
-1.9
-5.7
1.6
-0.8
-4.2
-10.6
-1.1
-7.7
-1.2
0.8
-3.6
-1.2
24.1
-3.6
-3.1
-2.1
-2.4
4.6
-0.4
0.0
-1.9
-6.7
5.1
-0.5
-4.6
-10.1
-0.8
GDP
growt
h
1.4
2.0
0.3
-0.5
2.9
1.2
0.0
4.0
2.7
3.2
1.3
5.3
-0.4
0.3
6.0
2.4
-1.9
15.2
4.8
3.3
5.3
-0.2
5.7
-0.5
-0.1
1.5
3.4
2.2
6.5
5.3
1.0
-1.0
1.6
CAB
%
GDP
-2.3
0.0
-0.7
7.0
3.3
-3.9
20.0
-4.5
-3.2
-3.4
-3.2
-12.3
2.9
0.4
-4.6
-2.6
31.9
-1.1
4.6
-2.4
0.7
0.5
9.7
2.4
7.5
7.3
-9.3
7.5
2.5
4.1
-9.1
-0.6
0.8
CPI
2.1
6.2
20.7
1.2
2.4
5.2
0.8
2.4
2.9
8.6
2.5
12.7
14.9
2.7
0.9
5.7
2.6
11.8
2.7
3.2
7.2
1.6
2.8
6.2
2.5
3.5
4.9
2.0
10.8
4.2
7.1
52.5
7.7
USD80/bbl
Budge
t/GDP
-4.2
-7.8
-1.8
-4.3
-7.2
1.4
-1.4
-4.3
-9.7
-3.3
-7.4
-1.5
-3.1
-3.8
-2.1
17.5
-3.6
-4.0
-2.3
-7.2
3.0
-1.1
-3.6
-3.1
-6.9
3.8
-0.5
-5.0
-11.7
-1.8
GDP
growt
h
0.5
-0.1
0.2
-2.7
2.7
1.2
-1.1
3.6
1.9
3.1
-0.7
5.2
-1.5
-1.6
5.8
1.1
-3.6
14.4
4.7
3.1
4.6
-2.0
5.1
-1.0
-2.0
1.0
3.1
1.2
6.6
5.2
0.3
-1.7
1.0
CAB
%
GDP
-4.0
-4.1
-0.8
3.1
2.7
-4.0
17.7
-5.3
-4.7
-3.5
-6.9
-12.7
0.9
-3.0
-4.9
-5.0
29.0
-2.7
4.3
-2.8
-0.7
-2.9
8.5
1.6
4.2
6.3
-9.8
5.6
2.5
3.6
-10.7
-1.8
-0.3
CPI
1.8
5.4
17.8
1.1
2.0
4.5
0.7
2.1
2.5
7.5
2.1
11.1
12.9
2.3
0.8
5.0
2.2
10.3
2.3
2.8
6.3
1.4
2.4
5.4
2.1
3.0
4.2
1.7
9.3
3.6
6.2
45.5
6.6
USD70/bbl
Budge
t/GDP
-5.9
-10.5
-1.8
-5.9
-8.3
1.3
0.0
-1.8
-4.4
-9.2
-4.8
-7.2
-1.8
-5.8
-3.9
-2.7
13.1
1.0
-3.7
-4.6
-2.5
-10.4
1.9
-1.5
-6.0
-3.9
-7.0
2.9
-0.5
-5.2
2.2
-12.8
-2.5
GDP
growt
h
-0.4
-2.2
0.2
-4.9
2.4
1.1
-2.3
3.2
1.0
3.0
-2.9
4.9
-2.7
-3.6
5.6
-0.2
-5.4
13.5
4.5
2.9
3.8
-4.0
4.5
-1.5
-3.9
0.4
2.9
0.2
6.6
5.0
-0.5
-2.4
0.4
CAB
%
GDP
-5.7
-8.2
-0.9
-0.8
2.0
-4.2
15.4
-6.0
-6.3
-3.6
-10.6
-13.0
-1.2
-6.4
-5.3
-7.4
26.1
-4.3
4.0
-3.2
-2.1
-6.2
7.3
0.7
0.9
5.3
-10.3
3.7
2.5
3.2
-12.2
-3.0
-1.4
Budge
CPI t/GDP
1.5
-7.6
4.5 -13.2
14.9
-1.8
0.9
-7.5
1.7
-9.3
3.7
1.2
0.6
1.7
-2.2
2.1
-4.5
6.4
-8.6
1.8
-6.2
9.5
-7.0
10.8
-2.0
1.9
-8.4
0.7
-4.0
4.2
-3.3
1.8
8.7
8.8
1.9
-3.7
2.4
-5.2
5.4
-2.6
1.2 -13.6
2.0
0.8
4.5
-1.9
1.7
-8.4
2.5
-4.6
3.6
-7.1
1.4
2.0
7.8
-0.5
3.0
-5.5
5.3
38.5 -13.9
5.6
-3.1
% exports to energy credits represents amount of exports to energy exporting nations globally and is meant to determine potential lost growth and CAR due to
reduced demand by trade partners. CAB = Current Account Balance. All analyses assume no FX adjustment or fiscal policy respone to the impact of oil price
changes.Source: EM Strategy desk estimates and forecasts (not necessarily the view of BNP Paribas fundamental analysts)

London +44 207 595 8195
31 October 2014
13
Net importing EMs: Oil price scenarios and economic impact

We use similar underlying data to determine the fiscal and economic cost/benefit related to our
oil price scenarios (Figure 28). Many net energy-importing economies produce oil, and the
economy and fiscal accounts benefit from the sector.
The ouput from our scenario analysis is presented in Figure 29. Here, it can be seen that growth
in a number of EM economies will benefit from lower energy costs, with Lithuania, Singapore,
Bulgaria, Thailand, Jamaica and Morocco are at the top of the list, with the oil price at USD
80/bbl (Figure 32). Meanwhile, the likes of Estonia, Latvia (Russian trade), Bolivia, Moldova and
Cambodia (trade with Vietnam), are likely to benefit least, with Estonias CAB revealing some
deterioration as reduced exports to Russia more than offset the benefits of lower energy import
costs.
Belarus is a bit surprising, as we would have expected Russia-related trade effects (50% of
exports are destined to oil states, mostly the Federation) would have taken a greater toll. But
the country will seem to benefit from lower import costs (which will significantly improve the
CAB) as well as from consumption benefits related to improved disposable income. Still, the fact
that Belarus is suggested to see improved growth reveals some of the limitations of the acrossthe-board analysis we have employed.
Figure 28: Net energy importers: Main economic drivers for energy
Domestic production
Region
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Latin America
Latin America
Latin America
Latin America
Latin America
Latin America
Latin America
Latin America
Latin America
Latin America
Latin America
Latin America
Latin America
Country
Cambodia
China
Hong Kong
India
Indonesia
Korea
Mongolia
Pakistan
Philippines
Seychelles
Singapore
Sri Lanka
Taiwan
Thailand
Bolivia
Chile
Costa Rica
Cuba
Dom Rep
El Salvador
Guatemala
Honduras
Jamaica
Nicaragua
Panama
Peru
Uruguay
Emerging Europe
Emerging Europe
Emerging Europe
Emerging Europe
Emerging Europe
Emerging Europe
Emerging Europe
Emerging Europe
Emerging Europe
Emerging Europe
Emerging Europe
Emerging Europe
Emerging Europe
Emerging Europe
Emerging Europe
CIS
CIS
Middle East
Middle East
Bulgaria
Croatia
Czech Republ
Estonia
Hungary
Latvia
Lithuania
Macedonia
Moldova
Poland
Romania
Serbia
Slovakia
Slovenia
Turkey
Belarus
Ukraine
Israel
Jordan
Middle East
Middle East
Africa
Africa
Africa
Africa
Africa
Lebanon
Syria
Botswana
Kenya
Morocco
South Africa
Zimbabwe
Fiscal implications 2015f
Proven
reserves Produced
(million bbl) '000/bpd
0
0
17,300
4,164
0
0
5,476
772
4,030
825
0
0
50
10
248
60
139
21
0
0
0
20
0
0
2
22
453
241
210
47
150
7
0
0
124
50
0
0
0
0
83
10
0
0
0
2
0
0
0
0
579
63
0
1
Exports
'000/bpd
0
33
0
0
338
0
0
0
20
0
0
0
0
32
0
0
0
83
0
0
11
0
0
0
0
16
0
Imports
'000/bpd
0
5,664
0
3,272
388
2,590
13
151
182
0
1,137
36
886
794
0
170
10
165
27
16
0
0
23
13
0
100
39
Oil&gas
contribution
to budget %
0.00
2.56
0.00
5.66
7.74
0.00
3.76
2.23
0.64
0.00
0.62
0.00
0.38
4.61
3.49
0.16
0.05
1.85
0.01
0.00
1.84
0.01
0.77
0.00
0.00
1.19
0.09
Oil & gas

subsidies
USDbn
0.00
17.44
0.00
40.38
24.20
0.25
0.00
0.00
0.00
0.00
0.00
0.00
0.00
5.25
1.81
0.00
0.00
0.00
0.00
0.11
0.00
0.00
0.00
0.00
0.00
0.00
0.00
Inflation weights %
Economic components
Fuel
subsidy %
govt Household Transportat Agriculture/ Industry/GD Services/GD
revenue
& utilities
ion
GDP
P
P
0.00
5.03
6.51
32.20
22.50
39.10
0.68
5.60
10.00
9.10
47.10
43.80
0.00
0.00
8.07
0.00
7.30
92.60
18.62
3.00
5.48
15.20
29.10
55.80
14.28
6.71
19.10
14.60
46.00
39.40
0.07
10.14
17.03
2.40
39.10
48.20
0.00
6.71
12.51
16.50
32.30
51.20
0.00
5.03
6.51
21.40
23.40
55.10
0.00
3.20
7.80
14.00
31.20
54.80
0.00
5.03
6.51
2.30
38.60
59.10
0.00
0.00
16.00
0.00
27.40
72.60
0.00
6.71
12.51
12.50
30.30
57.20
0.00
0.00
15.34
1.30
29.80
69.30
6.34
6.71
26.80
10.80
46.30
42.90
10.08
6.71
12.51
14.20
37.70
51.30
0.00
7.02
14.47
5.50
33.80
52.60
0.00
8.65
18.19
6.20
22.10
71.60
0.00
6.71
12.51
4.20
22.00
72.20
0.00
6.71
12.51
11.50
20.50
68.00
2.05
7.77
12.02
11.20
29.20
59.60
0.00
7.95
10.92
12.90
24.50
62.60
0.00
6.67
9.05
12.20
26.90
60.90
0.00
6.71
12.51
6.20
29.50
64.30
0.00
6.71
12.51
17.40
26.20
56.40
0.00
4.90
16.50
5.80
16.40
77.80
0.00
5.75
14.30
5.90
33.10
52.50
0.00
5.73
10.13
9.70
22.40
68.00
Household
consum %
GDP
82.30
34.09
66.08
61.77
59.25
52.04
49.19
81.05
73.30
81.02
37.74
66.84
37.74
53.66
59.47
64.04
64.37
49.16
83.25
92.36
86.61
80.99
86.35
85.41
62.35
61.44
68.71
% exports to
energy
names
12.30
14.70
15.50
26.80
12.00
16.30
12.80
20.70
8.40
12.00
18.20
12.40
15.00
16.60
35.70
17.80
13.30
40.00
0.00
5.30
13.20
5.60
23.60
8.10
24.50
23.70
46.00
15
71
15
0
27
0
12
0
0
157
600
78
9
0
270
198
395
12
1
1
12
3
11
12
1
9
0
0
19
85
17
9
0
46
30
43
6
0
0
0
0
8
0
0
2
0
0
4
2
0
0
0
0
0
0
0
0
125
51
154
0
115
0
190
52
0
548
122
33
108
0
339
295
155
261
68
0.04
0.38
0.03
0.80
0.12
0.06
0.43
0.00
0.05
0.14
0.90
0.69
0.19
0.01
0.16
1.63
1.78
0.11
0.03
0.00
0.00
0.21
0.11
0.00
0.00
0.00
0.00
0.00
0.26
0.00
0.00
0.15
0.14
0.86
0.00
6.16
0.66
0.00
0.00
0.00
0.25
1.11
0.00
0.00
0.00
0.00
0.00
0.26
0.00
0.00
0.43
0.72
0.41
0.00
16.64
0.75
0.00
4.70
4.90
10.14
4.97
5.14
5.10
5.50
0.00
5.03
4.62
5.06
6.71
6.34
6.97
7.52
6.71
2.50
14.40
6.71
7.50
13.00
17.03
14.26
15.45
10.00
11.20
8.20
6.51
9.42
7.00
8.20
8.39
15.37
15.54
12.51
4.70
16.80
12.51
6.00
6.70
2.20
2.60
2.80
3.90
4.20
12.00
16.70
3.60
12.60
12.80
2.70
2.50
8.50
7.00
9.60
2.60
3.40
28.20
27.10
38.90
26.90
34.90
21.50
28.50
29.30
20.80
32.80
38.60
22.50
36.50
30.80
25.60
37.00
32.70
31.60
30.40
63.60
66.20
58.90
70.50
62.30
74.60
67.30
58.60
62.60
62.50
51.40
64.80
60.90
66.70
65.90
56.00
57.70
64.40
66.20
63.05
61.05
50.70
52.84
62.85
62.39
64.05
68.95
92.86
60.80
71.53
77.02
57.38
57.36
70.90
49.96
73.44
56.23
81.15
6.20
5.40
5.10
12.20
7.30
13.50
13.40
1.80
29.70
7.70
7.00
6.40
5.40
6.90
18.50
51.90
36.00
7.40
31.30
0
2,500
0
0
1
15
0
0
58
0
0
5
4
0
0
152
0
0
0
0
0
0
0
0
31
123
385
0
0.00
33.75
0.00
0.00
0.20
0.04
0.15
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
4.90
4.90
4.90
5.03
6.71
4.90
5.03
16.50
16.50
16.50
6.51
12.51
16.50
6.51
4.90
17.20
1.90
22.20
17.30
3.10
17.50
15.30
27.00
28.80
16.70
31.30
31.90
24.90
79.80
55.70
59.40
64.40
51.40
65.00
57.40
71.00
59.09
51.22
79.67
59.71
61.21
87.01
49.60
23.10
14.80
12.40
13.90
6.00
5.20
All analyses assume no FX adjustment.

Source: EM Strategy desk estimates and forecasts (not necessarily the view of BNP Paribas fundamental analysts)

London +44 207 595 8195
31 October 2014
14
Figure 29: Percentage of total country exports to energy-producing trade partners

60
50
Economies with lower trade exposure toward energy producing names
Economies with greater trade exposure toward energy producing names will see
a greater negative economic impact related to reduced demand among trade
partners.
40
30
20
Belarus
Lebanon
Uruguay
Cuba
Bahrain
Ukraine
Bolivia
Argentina
Jordan
Moldova
Zambia
India
Colombia
Panama
Tanzania
Peru
Jamaica
Syria
Brazil
Ethiopia
Pakistan
Liberia
Uzbekistan
Turkey
Gabon
Singapore
Guinea
Ecuador
Chile
Kazakhstan
Thailand
Korea
Yemen
Egypt
Hong Kong
Taiwan
Botswana
China
Nigeria
Morocco
Latvia
Lithuania
Costa Rica
UAE
Guatemala
Ghana
Mongolia
Ivory Coast
Kenya
Sri Lanka
Cambodia
Estonia
Indonesia
Seychelles
Algeria
Mexico
Vietnam
T&T
Malaysia
Oman
Azerbaijan
Philippines
Saudi Arabia
Nicaragua
Poland
Bangladesh
Israel
Kuwait
Hungary
Iraq
Romania
Slovenia
Uganda
Tunisia
Russia
Turkmenis
Serbia
Bulgaria
South Africa
Venezuela
Honduras
Croatia
Slovakia
El Salvador
Zimbabwe
Czech
Libya
Angola
Iran
Qatar
Mozambique
Macedonia
Brunei
DR Congo
Dom Rep
10
Figure 30: Net energy importers Oil price economic impact scenarios
USD105/bbl
GDP
growt CAB %
h
GDP
7.3 -10.4
7.0
2.2
3.1
2.3
5.5
-2.0
5.6
-2.6
3.8
4.8
8.0 -14.4
4.7
-2.6
6.5
2.6
4.6 -11.1
3.7
18.1
7.1
-2.5
3.7
10.7
4.0
1.0
4.0
2.3
3.3
-2.3
4.1
-5.6
3.9
-1.9
4.6
-3.1
1.8
-5.6
3.5
-2.9
3.3
-8.5
1.8
-8.6
4.5 -11.7
6.1
-9.3
5.4
-4.5
3.4
-5.4
CPI
3.8
2.2
4.0
7.2
6.2
1.5
12.8
8.3
4.3
2.9
1.5
4.1
1.5
2.3
6.8
4.2
4.6
5.3
3.3
1.2
3.5
6.2
8.4
6.1
3.5
3.2
8.8
USD90/bbl
GDP
Budge growt CAB %
t/GDP
h
GDP
-3.2
7.4 -10.4
-3.1
7.2
2.5
0.3
3.3
2.3
-5.8
5.9
-1.3
-1.8
5.8
-2.5
0.7
4.1
4.9
-3.2
8.4 -13.9
-6.8
5.0
-2.3
-1.6
6.8
2.9
1.6
4.7 -11.1
1.4
4.4
19.9
-6.3
7.3
-2.5
-1.4
4.3
11.6
-2.0
4.8
2.0
0.1
4.1
2.3
-1.0
3.7
-2.0
-5.1
4.4
-5.5
-3.6
4.3
-1.2
-2.5
4.9
-2.9
-3.3
2.1
-5.6
-2.6
3.7
-3.0
-4.2
3.5
-8.5
-2.0
2.5
-7.7
-1.8
4.8 -11.7
-2.5
6.2
-9.3
0.1
5.6
-4.3
-2.4
3.7
-5.1
CPI
3.2
1.8
3.3
6.1
5.1
1.2
10.6
7.0
3.6
2.4
1.2
3.4
1.2
1.9
5.6
3.5
3.8
4.4
2.7
1.0
2.9
5.2
6.9
5.1
2.9
2.7
7.3
USD80/bbl
GDP
Budge growt CAB %
t/GDP
h
GDP
-3.2
7.4 -10.4
-3.2
7.3
2.6
0.3
3.3
2.3
-5.6
6.2
-0.8
-1.7
5.9
-2.5
0.8
4.1
4.8
-3.4
8.6 -13.5
-6.8
5.1
-2.1
-1.6
6.9
3.0
1.6
4.8 -11.1
1.4
4.9
21.1
-6.3
7.3
-2.5
-1.4
4.6
12.2
-1.9
5.1
2.7
0.6
4.1
2.3
-1.0
3.8
-1.7
-5.1
4.5
-5.4
-3.7
4.6
-0.8
-2.5
5.1
-2.8
-3.3
2.1
-5.6
-2.6
3.7
-3.0
-4.2
3.5
-8.5
-2.1
2.8
-7.1
-1.8
4.8 -11.7
-2.5
6.2
-9.3
0.1
5.7
-4.2
-2.4
3.9
-4.8
USD70/bbl
CPI
2.8
1.6
2.9
5.3
4.3
1.0
9.2
6.1
3.2
2.1
1.0
2.9
1.1
1.6
4.9
3.0
3.2
3.8
2.4
0.9
2.5
4.5
6.0
4.4
2.5
2.3
6.4
GDP
Budge growt CAB %
t/GDP
h
GDP
-3.2
7.4 -10.4
-3.2
7.4
2.8
0.3
3.3
2.3
-5.5
6.4
-0.3
-1.5
5.9
-2.5
0.8
4.1
4.8
-3.5
8.8 -13.1
-6.9
5.2
-1.9
-1.6
7.0
3.2
1.6
4.8 -11.1
1.4
5.3
22.4
-6.3
7.4
-2.5
-1.4
4.9
12.8
-1.9
5.5
3.3
0.9
4.1
2.3
-1.0
4.0
-1.5
-5.1
4.6
-5.3
-3.8
4.8
-0.4
-2.5
5.2
-2.6
-3.2
2.2
-5.6
-2.7
3.7
-3.1
-4.2
3.5
-8.5
-2.1
3.1
-6.5
-1.8
4.8 -11.7
-2.5
6.2
-9.3
0.0
5.8
-4.0
-2.4
4.0
-4.6
Budge
CPI t/GDP
2.4
-3.2
1.4
-3.3
2.4
0.3
4.6
-5.4
3.6
-1.4
0.9
0.8
7.7
-3.7
5.2
-6.9
2.7
-1.6
1.8
1.6
0.9
1.4
2.5
-6.3
0.9
-1.4
1.3
-1.8
4.1
1.3
2.5
-1.0
2.7
-5.1
3.2
-3.9
2.0
-2.5
0.7
-3.2
2.1
-2.7
3.8
-4.2
5.0
-2.1
3.7
-1.8
2.1
-2.5
1.9
0.0
5.4
-2.4
Region
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Latin America
Latin America
Latin America
Latin America
Latin America
Latin America
Latin America
Latin America
Latin America
Latin America
Latin America
Latin America
Latin America
Country
Cambodia
China
Hong Kong
India
Indonesia
Korea
Mongolia
Pakistan
Philippines
Seychelles
Singapore
Sri Lanka
Taiwan
Thailand
Bolivia
Chile
Costa Rica
Cuba
Dom Rep
El Salvador
Guatemala
Honduras
Jamaica
Nicaragua
Panama
Peru
Uruguay
Emerging Europe
Emerging Europe
Emerging Europe
Emerging Europe
Emerging Europe
Emerging Europe
Emerging Europe
Emerging Europe
Emerging Europe
Emerging Europe
Emerging Europe
Emerging Europe
Emerging Europe
Emerging Europe
Emerging Europe
CIS
CIS
Middle East
Middle East
Bulgaria
Croatia
Czech Republ
Estonia
Hungary
Latvia
Lithuania
Macedonia
Moldova
Poland
Romania
Serbia
Slovakia
Slovenia
Turkey
Belarus
Ukraine
Israel
Jordan
2.0
0.5
2.5
3.0
2.5
3.7
3.8
3.7
3.3
3.3
3.4
2.0
2.5
1.0
3.4
2.8
1.2
3.2
4.3
-0.5
0.9
-1.1
-0.7
2.2
-1.5
-1.9
-3.6
-5.8
-1.6
-1.8
-6.3
0.6
4.7
-6.0
-5.0
-4.0
2.6
-8.5
-0.9
0.3
0.5
1.3
0.2
0.7
0.8
0.1
5.5
0.2
1.6
2.6
0.4
1.0
9.0
16.9
10.8
0.8
3.0
-1.4
-4.5
-2.3
-0.1
-3.0
0.1
-1.6
-3.0
-1.7
-1.6
-1.8
-4.1
-2.6
-2.9
-3.0
-0.4
-4.2
-2.6
-6.6
2.7
0.9
3.0
3.0
2.9
3.8
5.0
3.9
3.4
3.7
3.7
2.4
2.9
1.2
3.8
2.9
1.5
3.7
5.0
0.8
1.4
-0.6
-0.8
2.6
-1.5
0.2
-3.4
-5.8
-1.1
-1.4
-5.9
1.2
4.7
-5.8
-3.8
-3.3
3.0
-7.5
-0.8
0.2
0.4
1.1
0.2
0.6
0.7
0.1
4.6
0.2
1.3
2.2
0.3
0.8
7.4
14.0
9.1
0.6
2.5
-1.4
-4.5
-2.3
-0.1
-3.0
0.1
-1.6
-3.0
-1.7
-1.6
-1.9
-4.2
-2.6
-2.9
-3.0
-0.5
-3.6
-2.6
-6.6
3.1
1.1
3.1
3.0
3.0
3.8
5.7
4.0
3.4
3.9
3.8
2.5
3.1
1.2
3.9
3.1
1.7
3.9
5.4
1.7
1.7
-0.3
-1.0
2.9
-1.5
1.6
-3.4
-5.8
-0.7
-1.2
-5.6
1.6
4.7
-5.6
-1.9
-2.8
3.3
-6.9
-0.7
0.2
0.3
0.9
0.1
0.5
0.6
0.1
4.0
0.1
1.2
1.9
0.3
0.7
6.4
12.1
8.0
0.5
2.1
-1.4
-4.5
-2.3
-0.1
-3.0
0.1
-1.6
-3.0
-1.7
-1.6
-1.9
-4.2
-2.6
-2.8
-3.0
-0.6
-3.2
-2.5
-6.6
3.5
1.3
3.3
2.9
3.2
3.8
6.4
4.0
3.4
4.1
3.9
2.7
3.3
1.2
4.0
3.4
1.8
4.0
5.7
2.5
2.1
-0.1
-1.1
3.2
-1.5
3.1
-3.4
-5.8
-0.4
-1.0
-5.3
2.0
4.7
-5.5
0.0
-2.4
3.6
-6.2
-0.6
0.2
0.3
0.8
0.1
0.4
0.5
0.1
3.5
0.1
1.0
1.6
0.2
0.6
5.3
10.2
6.9
0.4
1.8
-1.4
-4.5
-2.3
-0.1
-3.0
0.1
-1.6
-3.0
-1.7
-1.6
-1.9
-4.2
-2.6
-2.8
-3.0
-0.6
-2.8
-2.5
-6.6
Middle East
Middle East
Africa
Africa
Africa
Africa
Africa
Lebanon
Syria
Botswana
Kenya
Morocco
South Africa
Zimbabwe
2.6
2.4
5.1
5.7
4.3
2.5
3.4
-6.8
-7.3
12.6
-7.1
-6.3
-5.0
-37.5
2.8
34.8
4.6
7.5
1.0
6.2
0.0
-10.1
-3.5
1.6
-6.2
0.0
-4.3
-4.9
2.8
1.9
5.3
5.8
4.8
3.0
3.5
-6.8
-8.7
12.6
-7.1
-5.7
-4.4
-37.5
2.3
28.8
3.8
6.3
0.8
5.1
0.0
-10.1
-3.7
1.6
-6.2
0.0
-4.3
-4.9
2.8
1.5
5.3
5.8
5.0
3.2
3.4
-6.8
-9.6
12.6
-7.1
-5.3
-4.1
-37.5
2.0
24.7
3.3
5.5
0.7
4.4
0.0
-10.1
-3.9
1.6
-6.2
0.0
-4.3
-4.9
2.9
1.1
5.3
5.9
5.3
3.4
3.4
-6.8
-10.5
12.6
-7.1
-4.9
-3.7
-37.5
1.7
20.7
2.7
4.7
0.6
3.7
0.0
-10.1
-4.0
1.6
-6.2
0.0
-4.3
-4.9
All analyses assume no FX adjustment. Source: EM Strategy desk estimates and forecasts (not necessarily the view of BNP Paribas fundamental analysts)

London +44 207 595 8195
31 October 2014
15
Figure 31: Forecast 2015 GDP growth and CAB/GDP ratio with oil at USD 80/bbl
4.0
Growth for a number of EM economies
will benefit from lower energy costs,
with Lithuania, Singapore, Bulgaria,
Jamaica, Morocco and Thailand at the
top of the list.
3.5
3.0
2.5
2.0
The likes of Estonia, Latvia (owed to Russian trade),

Bolivia, Moldova and Cambodia (due to trade with
Vietnam), are likely to benefit least.
1.5
1.0
0.5
0.0
Lithuania
Singapore
Bulgaria
Thailand
Jordan
Jamaica
Taiwan
Morocco
Israel
South Africa
India
Cuba
Czech Republic
Slovakia
Croatia
Mongolia
Poland
Hungary
Chile
Serbia
Uruguay
Ukraine
Belarus
Turkey
Dom Rep
Romania
Pakistan
Peru
Costa Rica
Philippines
El Salvador
China
Indonesia
Korea
Nicaragua
Macedonia
Sri Lanka
Lebanon
Slovenia
Honduras
Guatemala
Hong Kong
Botswana
Seychelles
Kenya
Panama
Latvia
Cambodia
Moldova
Bolivia
Zimbabwe
Estonia
-0.5
GDP growth
CAB % GDP
The big picture: Impact on EM as a whole

Figure 32 presents a collective analysis of oil prices for EM, and the impact on the indicators of
an oil price decline from the previous average of USD 105/bbl can be seen more easily in
Figure 33.
On the whole, we can say that the fall in oil prices will prove negative, shaving 0.4pp from 2015
EM GDP growth. The collective current account balance will fall 0.58pp to 0.9% of GDP, while
the budget deficit will deteriorate by 0.61pp to -2.7%. This probably has the worst implications
for EM as an asset class in the credit world.
For oil exporters, oil at
USD 80/bbl means the
collective CAB will fall into
a 0.3% of GDP deficit from
a 2.4% surplus
Energy exporters will fare worst, with growth falling by 1.9pp and their current account balances
suffering negative pressure to the tune of 2.69pp of GDP. Budget balances will suffer a 1.67pp
of GDP fall, despite benefits from lower subsidy costs. The impact of oil falling USD 25/bbl will
be likely to put push the current account balance into deficit, with our analysis indicating a 0.3%
of GDP deficit from a 2.4% surplus before. Fortunately, the benefit to inflation will be the best in
EM and could help offset some of the political risks from reduced growth.
As might be expected, energy importers will benefit by 0.4pp better growth in this scenario.
Their collective current account will improve by 0.6pp to 1.6% of GDP.
Growth rates in the Middle

East and CIS will suffer
most
The regions worst hit are the Middle East, with GDP growth slowing to 0.6%, which is 3.8pp
lower than when oil was averaging USD105/bbl. The regions fiscal accounts will also suffer
most in EM, moving from a 1.7% of GDP surplus to a 1.9% deficit. Meanwhile, the CAB will drop
5.3pp, although remain in surplus at 3.9%. The CIS is the next-worst hit, from a GDP
perspective, with regional growth flat-lined versus 1.5% previously. The regions fiscal deficit will
worsen from 0.7% of GDP to -1.8% and CAB shrink to 0.8% from 3.1% of GDP. Africas growth
will come in 1.4pp slower at 3.3% while Latam growth will be 0.4pp slower at 2.0%. For Africa,
the CAB/GDP ratio will fall by 2.4pp pushing it deep into deficit (-3.4% of GDP).
While some regions will

benefit including EM
Europe and Asia
Some regions benefit, however, with Asia ex-China growing 0.45bpp faster at 5.2% and EM
Europe (ex-CIS) growing 0.55pp faster at 3.6%, with the regions CAB/GDP improving 0.69pp,
although remain in deficit to the tune of -2.0% of GDP.

London +44 207 595 8195
31 October 2014
16
Figure 32: Impact of oil price (Brent) at USD 80/bbl on key credit fundamentals
Inflation weights %
Economic components
USD105/bbl
Househ
Househol % exports GDP
old & Transpo Agricult Industry/ Services d consum to energy growt
utilities rtation ure/GDP
GDP
/GDP
% GDP
credits
h
Energy export
5.7
12.5
7.0
37.7
54.1
55.3
13.4
3.0
6.7
12.5
8.8
39.4
50.9
47.5
16.0
5.5
Energy-import
Asia ex-China
6.6
12.7
10.0
34.0
53.9
56.9
18.0
4.8
China
5.6
10.0
9.1
47.1
43.8
34.1
14.7
7.0
Latam
5.0
15.5
6.1
30.0
63.4
64.1
19.6
2.4
EM Europe
6.4
12.5
6.2
30.8
62.9
64.8
11.2
3.0
CIS
5.9
11.4
4.6
35.5
59.7
52.8
10.7
1.5
Middle East
9.6
15.0
4.0
51.5
44.1
41.0
9.2
4.4
Africa
5.0
10.7
16.7
34.0
42.3
64.1
11.7
4.7
Global EM
6.1
12.3
8.2
38.8
52.0
50.3
15.1
4.6
CAB
%
GDP
2.4
1.0
2.3
2.2
-2.5
-2.7
3.1
9.2
-1.0
1.5
GDP
Budge growt
CPI t/GDP
h
9.2
-0.8
1.7
3.4
-2.8
5.8
4.5
-2.6
5.1
2.2
-3.1
7.2
11.5
-1.5
2.1
3.5
-2.4
3.4
7.8
-0.7
0.1
5.9
1.7
1.8
6.9
-4.0
3.8
5.5
-2.1
4.3
USD90/bbl
USD80/bbl
USD70/bbl
CAB
%
GDP
0.8
1.4
2.6
2.5
-3.0
-2.3
1.7
6.0
-2.4
1.2
CAB
%
GDP
-0.3
1.6
2.9
2.6
-3.3
-2.0
0.8
3.8
-3.4
0.9
CAB
%
GDP
-1.4
1.8
3.1
2.8
-3.6
-1.7
-0.1
1.7
-4.3
0.7
GDP
Budge growt
CPI t/GDP
h
7.7
-1.8
1.1
2.8
-2.8
6.0
3.7
-2.5
5.2
1.8
-3.2
7.3
9.5
-1.9
2.0
2.9
-2.4
3.6
6.5
-1.3
-0.4
4.9
-0.5
0.6
5.8
-4.6
3.3
4.6
-2.5
4.2
GDP
Budge growt
CPI t/GDP
h
6.6
-2.5
0.5
2.5
-2.8
6.1
3.2
-2.5
5.4
1.6
-3.2
7.4
8.2
-2.2
1.8
2.5
-2.4
3.7
5.6
-1.8
-1.0
4.2
-1.9
-0.6
5.0
-5.0
2.8
4.0
-2.7
4.1
Budge
CPI t/GDP
5.6
-3.1
2.1
-2.8
2.8
-2.4
1.4
-3.3
6.9
-2.5
2.1
-2.4
4.8
-2.2
3.5
-3.4
4.3
-5.4
3.3
-2.9
Oil price standardised at Brent in all analyses. Based on 85 EM economies. Global and regional data is GDP weighted.
Source: BNP Paribas strategy desk analysis and estimates (not necessarily the view of BNP Paribas fundamental analysts)
0.0
0.5
0.7
0.3
0.4
0.1
1.0
0.5
0.6
0.4
0.6
Figure 33: Impact of oil price (Brent) at USD 80/bbl on key 2015f credit fundamentals
GDP growth
CAB % GDP
CPI
-0.6
-1.0
-0.4
-0.6
Global EM
CIS
EM Europe
Latam
China
Asia ex-China
Energy-importers
Energy exporters
-6.0
Africa
-3.8
-2.4
-1.5
-3.6
-1.1
-0.7
-0.4
-0.7
-0.1
-1.7
-5.0
Middle East-5.3
-4.0
-1.9
-2.3
-3.0
-1.9
-2.7
-1.0
-2.0
0.0
0.0
Budget/GDP
Oil price standardised at Brent in all analyses. Based on 85 EM economies.

Source: BNP Paribas strategy desk analysis (not necessarily the view of BNP Paribas fundamental analysts)

London +44 207 595 8195
31 October 2014
17
The impact of oil volatility on EM credit ratings

For energy-producing sovereigns, it is largely about lost fiscal revenue, lost GDP growth and the
contribution to reserves of oil- and gas-related export receipts. Together, these will have a
significant effect on sustainability and liquidity ratios. That said, the accumulated benefits of
globalisation, particularly since 2001 which include various structural reforms, high reserve
levels, fewer FX pegs and better credit fundamentals leave emerging markets in a strong
starting position. It is also worth bearing in mind that rating agencies strive to see through
economic cycles. In many cases, there is still time for policy adjustments to be made before
downgrades are manifest.
We present a list of key
sovereign statistics,
highlighting their ability to
drive credit ratings.
In Figure 35 we present a compilation of key sovereign credit risk ratios (political risk, fiscal,
sustainability and liquidity) for this year across the universe of 90 EMs that we track (on the
Strategy desk). The data are broken down by credit rating and reflect trends, averages and
medians among each rating group and indicator. At the top of Figure 35, we also show the
explanatory strength of each, which reflects their ability to drive credit ratings.
We select those that have the strongest R-Square statistics for our final ratings driver model.
Not surprisingly, considering the high level of subjective components in credit rating models,
political risk statistics have the greatest strength. Surprisingly, GDP growth, its average and its
volatility do not have much power. Public debt to GDP is also surprisingly weak and it is
remarkable how weak the external debt-to-GDP ratio is. Stronger was the external debt to CAR
with the three-year average CAB/GDP ratio the strongest among sustainability indicators.
Among liquidity indicators, external debt over FX reserves was the best. The total external
funding gap (EFG) over reserves was relatively weak, which is not surprising in light of the
distortion provided by high levels of short-term debt, as we have mentioned previously. The
second best liquidity variable is debt service to total current account receipts (CAR).
Figure 34 shows the fit of our selected indicators that best drive EM credit rating. Although
external debt/CAR and the external funding gap (EFG)/GDP appeared valid indicators in Figure
35, auto-correlation effects are likely to have resulted in these variables displaying a counterintuitive sign in our first run analysis (Figure 34) and we have therefore removed these in our
final selection of explanatory indicators. This did not seem to have a significant impact on the
explanatory power of the model which runs at nearly 70%.
Figure 34: Important ratings driver analysis
First run selected indicators
Multiple R
0.842
R Square
0.709
Adjusted R Square
0.694
Standard Error
2.515
Observations
201
Intercept
Political risk
Per Capita GDP
3Y avg CPI avg
Fiscal balance/GDP
Public debt/GDP
Ext Debt/CAR
3Y Avg CAB/GDP
Ext Debt/Rsvs
EFG/Rsvs
Debt Service/CAR
Coefs
9.9364
-1.2233
0.9377
-1.5353
0.0730
-0.4700
0.0072
0.0334
-0.4828
0.3229
-0.5640
Error
3.65
0.23
0.33
0.29
0.05
0.21
0.00
0.03
0.21
0.18
0.15
T Stat
2.72
-5.28
2.84
-5.39
1.37
-2.26
1.50
1.16
-2.26
1.77
-3.77
Final selection
Multiple R
R Square
Adjusted R Square
Standard Error
Observations
0.837
0.701
0.689
2.536
201
Intercept
Political risk
Per Capita GDP
3Y avg CPI avg
Fiscal balance/GDP
Public debt/GDP
3Y Avg CAB/GDP
Ext Debt/Rsvs
Debt Service/CAR
Coefs
9.5646
-1.1659
1.0602
-1.5118
0.0973
-0.3797
0.0222
-0.2508
-0.5274
Error
3.65
0.23
0.33
0.29
0.05
0.20
0.03
0.19
0.15
T Stat
2.62
-5.05
3.23
-5.28
1.85
-1.87
0.81
-1.35
-3.58
Green heading = Underlying indicators have been adjusted for non-linearity Source: BNP Paribas strategy research

London +44 207 595 8195
31 October 2014
18
Figure 35: 2014 external debt rating indicators

Wealth & public and political risk
Political Per Capita
risk score
GDP
RSQ
0.39
0.35
-2.67
3.47
Beta
4.42
3.26
Volatility
Fiscal risk
External debt sustainability
3Y avg 3Y GDP
Fiscal
3Y Vol Public
GDP Volatilit balance/
Fiscal debt/G
YoY
y
GDP bal/GDP
DP
0.00
0.02
0.20
0.00
0.08
0.10
-0.66
0.42
-0.20
-1.79
4.67
5.29
7.53
5.33
4.4
Liquidity ratios
Ext
Ext 3Y Avg
Ext
Debt/ Debt/C
CAB
Debt/R
GDP
AR
/GDP CAB/GDP
svs
0.04
0.13
0.20
0.13
0.41
-0.03
-0.03
0.20
0.13 -1.93
26.3
52.2
9.08
10.47
4.3
Debt
Ext Fund STD/Rsv Service/R
Gap/Rsvs
s
svs
0.10
0.02
0.07
-2.06
0.00
-0.04
3.8
21,632
23.1
Debt
Service/
CAR
0.26
-1.17
4.6
Import
cover
(mths)
0.04
0.21
4.80
CPI avg
0.20
-0.23
7.34
3Y avg
CPI
0.30
-3.27
5.17
GDP
YoY
0.02
0.28
4.74
40,770
38,411
36,052
33,693
31,335
28,976
26,617
24,258
21,899
19,541
17,182
14,823
12,464
10,105
7,746
5,388
3,029
670
1,689
0.40
0.58
0.60
0.69
1.57
2.45
3.33
4.21
5.09
5.96
6.84
7.72
8.60
9.48
10.36
11.23
12.11
12.99
13.87
0.08
0.14
0.85
1.56
2.28
2.99
3.71
4.42
5.13
5.85
6.56
7.28
7.99
8.70
9.42
10.13
10.85
11.56
12.27
4.04
3.96
3.87
3.79
3.71
3.63
3.54
3.46
3.38
3.29
3.21
3.13
3.05
2.96
2.88
2.80
2.71
2.63
2.55
3.75
3.73
3.70
3.67
3.64
3.62
3.59
3.56
3.53
3.51
3.48
3.45
3.43
3.40
3.37
3.34
3.32
3.29
3.26
0.86
0.89
0.91
0.94
0.96
0.99
1.01
1.04
1.07
1.09
1.12
1.14
1.17
1.19
1.22
1.24
1.27
1.29
1.32
1.83
1.34
0.86
0.37
-0.11
-0.60
-1.09
-1.57
-2.06
-2.54
-3.03
-3.52
-4.00
-4.49
-4.97
-5.46
-5.94
-6.43
-6.92
0.91
0.92
0.93
0.93
0.94
0.95
0.96
0.97
0.97
0.98
0.99
1.00
1.01
1.01
1.02
1.03
1.04
1.04
1.05
31.0
32.6
34.2
35.9
37.5
39.2
40.8
42.4
44.1
45.7
47.3
49.0
50.6
52.3
53.9
55.5
57.2
58.8
60.4
29.2
30.6
31.9
33.3
34.6
35.9
37.3
38.6
39.9
41.3
42.6
44.0
45.3
46.6
48.0
49.3
50.6
52.0
53.3
48.1
52.3
56.4
60.5
64.6
68.8
72.9
77.0
81.1
85.3
89.4
93.5
97.6
101.7
105.9
110.0
114.1
118.2
122.4
8.97
7.96
6.95
5.94
4.93
3.92
2.91
1.91
0.90
-0.11
-1.12
-2.13
-3.14
-4.15
-5.16
-6.16
-7.17
-8.18
-9.19
9.68
8.66
7.65
6.64
5.63
4.62
3.60
2.59
1.58
0.57
-0.44
-1.46
-2.47
-3.48
-4.49
-5.50
-6.52
-7.53
-8.54
-13
2
17
32
47
62
76
91
106
121
136
151
166
180
195
210
225
240
255
214
227
239
252
265
277
290
302
315
327
340
353
365
378
390
403
416
428
441
-13,104
-12,124
-11,143
-10,163
-9,182
-8,202
-7,221
-6,241
-5,260
-4,279
-3,299
-2,318
-1,338
-357
623
1,604
2,584
3,565
4,546
16.1
17.8
19.6
21.3
23.0
24.7
26.4
28.1
29.9
31.6
33.3
35.0
36.7
38.4
40.2
41.9
43.6
45.3
47.0
-38
-20
-3
14
32
49
66
84
101
118
136
153
171
188
205
223
240
257
275
7.35
7.16
6.97
6.78
6.59
6.40
6.21
6.02
5.83
5.63
5.44
5.25
5.06
4.87
4.68
4.49
4.30
4.11
3.91
1.94
1.58
2.90
2.84
2.62
3.01
2.61
3.82
3.65
3.35
3.66
4.20
4.05
4.17
4.67
4.22
5.12
5.19
3.66
78,744
27,344
85,660
26,197
23,163
25,766
23,275
16,463
13,188
15,941
11,782
9,496
8,749
9,433
4,591
10,469
18,194
8,788
15,586
1.80
1.60
3.00
2.00
1.60
2.50
0.80
3.80
3.65
3.50
4.60
3.50
3.55
5.30
5.50
8.30
64.40
11.50
18.00
2.93
1.77
2.73
2.53
2.45
2.37
1.80
3.43
4.27
3.43
4.77
4.37
5.33
7.01
5.00
8.53
42.03
3.93
25.73
4.10
2.70
2.70
4.00
3.00
3.00
2.80
2.40
4.35
3.10
3.40
3.55
5.60
5.00
4.40
1.80
-2.50
-6.50
1.70
3.50
2.27
4.67
3.53
2.77
3.72
3.33
3.77
4.33
3.37
3.03
3.73
5.10
4.77
4.13
2.03
1.47
-2.07
0.87
0.87
0.75
1.50
0.91
0.97
0.62
0.55
1.07
0.87
0.95
0.85
0.72
0.52
0.61
0.66
0.49
4.05
3.84
2.05
0.70
-1.40
7.10
-1.40
-1.75
-2.40
-1.90
-2.40
-2.50
-2.30
-3.50
-3.75
-3.60
-4.60
-4.60
-7.00
-12.20
-5.90
-1.50
0.60
1.01
2.30
0.65
0.64
0.79
0.42
0.67
0.55
0.38
0.42
0.50
0.82
1.99
1.42
1.50
2.06
1.31
0.32
105.6
36.9
10.0
15.8
37.0
45.4
42.0
41.0
46.8
39.0
49.5
54.2
47.5
49.4
44.3
94.0
51.1
65.0
33.3
9.3
57.8
18.6
21.4
30.0
30.6
33.1
30.1
33.0
31.5
58.7
35.2
40.0
38.5
36.3
41.6
13.6
116.1
23.3
4.4
63.3
24.2
40.6
50.6
44.2
67.0
116.1
89.3
104.4
118.3
90.9
89.4
89.4
77.0
92.8
77.0
190.1
38.6
18.56
-0.92
26.78
3.75
0.41
1.10
0.30
0.46
-3.33
-2.78
-5.22
-1.20
-3.68
-9.41
-8.14
-6.75
2.61
-7.58
6.78
19.88
-0.02
16.77
4.23
0.37
1.61
-0.14
2.45
-3.58
-2.84
-5.32
-1.11
-2.69
-8.92
-8.68
-6.85
1.55
-5.61
6.38
35
51
15
9
27
59
100
28
113
60
104
94
132
214
184
361
231
213
183
239
250
322
93
139
223
324
197
230
221
307
254
357
457
372
434
464
488
378
20
-518
88
181
0
9
0
0
-290
-301
-987
29
-258
-240
-218
-1,040
5,646
-3,612
32
1.7
45.5
25.7
3.7
9.8
15.6
38.3
18.0
39.5
22.1
31.0
28.9
15.2
22.5
34.9
41.5
16.8
91.8
27.2
0
22
18
2
6
15
22
9
66
57
81
141
78
350
274
82
17
94
12
5.05
4.90
3.09
9.09
5.32
4.24
4.11
6.45
5.75
5.92
4.18
5.04
3.50
2.98
3.31
2.90
2.68
2.99
3.38
2.33
2.69
3.06
2.35
2.51
2.88
3.33
3.31
3.36
3.59
3.72
4.54
4.18
3.59
4.38
4.54
4.48
4.43
65,974
85,036
104,099
65,876
27,653
31,883
17,011
22,607
16,244
13,527
14,024
7,874
8,785
12,511
8,307
12,241
10,456
8,672
2.70
2.89
3.08
2.06
1.89
2.13
2.63
3.40
5.48
4.35
2.70
4.10
4.64
7.31
6.46
22.55
23.22
23.90
3.47
3.17
2.87
2.31
3.09
1.62
2.85
3.76
5.17
4.82
3.50
4.59
6.06
7.67
6.12
19.65
17.66
15.68
3.25
3.72
4.18
3.71
3.56
4.34
2.83
3.54
2.40
3.77
2.03
4.38
4.82
6.14
4.14
1.25
-1.30
-3.85
2.88
4.11
5.33
3.23
3.24
4.72
3.70
3.64
2.91
3.61
2.03
4.26
4.71
6.99
4.47
1.79
0.60
-0.60
0.79
1.38
1.97
1.14
0.67
0.74
1.26
1.16
0.89
1.20
0.65
0.77
0.60
1.13
0.96
1.41
2.18
2.95
0.75
9.96
19.16
-0.63
-1.59
0.06
-1.85
-3.16
-1.26
-2.37
-4.33
-3.53
-5.08
-2.34
-6.74
-6.97
-5.41
-3.85
0.92
1.66
2.41
1.34
0.79
0.45
0.92
0.71
0.46
0.52
0.35
1.04
1.10
2.18
1.36
1.49
1.10
0.70
71.3
43.7
16.1
17.9
41.5
45.0
36.1
46.0
39.3
46.7
57.1
43.4
56.1
30.4
63.1
76.6
62.9
49.2
34.4
37.0
39.6
30.0
26.1
22.6
37.5
41.6
41.8
46.4
57.3
42.4
40.3
48.4
49.2
46.7
58.2
69.7
13.0
36.0
59.0
54.1
51.0
23.5
78.3
92.4
115.8
99.6
123.8
81.1
84.2
98.6
84.5
121.1
138.3
155.6
10.26
22.99
35.73
4.61
6.40
5.48
-1.39
-1.12
-0.55
-0.34
-2.54
-2.37
-2.54
-15.46
-7.59
-3.68
-3.86
-4.04
11.15
20.45
29.74
4.50
13.30
5.31
-1.48
-0.46
-0.73
-0.50
-2.51
-2.61
-1.89
-9.62
-7.85
-3.56
-3.38
-3.19
6
16
32
18
37
130
67
130
53
93
95
126
160
238
179
350
287
224
244
308
372
119
175
1,132
232
373
132
253
267
290
336
446
382
572
502
433
420
272
125
-35,143
256
2,198
-1,230
-387
-9,937
-331
2,164
-597
-18
-925
-1,001
-183
-2,670
-5,156
3.9
19.4
35.0
17.9
15.1
14.8
35.9
42.3
19.2
41.6
43.3
18.7
25.7
44.4
44.1
47.9
53.7
59.5
1
12
24
12
14
4
64
78
44
41
203
141
117
708
241
286
173
60
4.98
4.21
3.45
9.51
5.75
2.24
7.65
3.77
10.52
5.62
5.34
5.52
4.44
3.06
5.90
2.64
2.91
3.19
TREND VALUES
AAA
AA+
AA
AAA+
A
ABBB+
BBB
BBBBB+
BB
BBB+
B
BCCC+
CCC
D
2.23
2.38
2.53
2.67
2.82
2.97
3.12
3.26
3.41
3.56
3.71
3.85
4.00
4.15
4.29
4.44
4.59
4.74
4.88 -
MEDIAN VALUES
AAA
AA+
AA
AAA+
A
ABBB+
BBB
BBBBB+
BB
BBB+
B
BCCC+
CCC
D
AVERAGES
AAA
AA+
AA
AAA+
A
ABBB+
BBB
BBBBB+
BB
BBB+
B
BCCC+
CCC
EFG = External Funding Gap; CAR = Current Account Receipts; CAB = Current Account Balance. STD = Short Term Debt
Source: BNP Paribas strategy research

London +44 207 595 8195
31 October 2014
19
0.47
1.3
0.38
1.25
0.30
0.8
0.99
0.19
0.6
0.80
0.08
0.4
0.2
0.34
0.06
0.5
0.12
1.0
0.59
Asian (ex China) credit ratings stand to benefit most. If oil prices remain at
USD80/bbl, the region will be upgraded a full notch to A-.
1.5
1.1
2.0
1.49
Figure 36: Three-year sustained crude price shock on regional credit ratings (where 1 = one rating notch)
Asia ex-China
China
Latam
CIS
Africa
-0.98
-1.29
USD70/bbl
-0.78
-1.00
-0.53
-0.65
Middle East
USD75/bbl
USD85/bbl
EM Europe
USD80/bbl
-0.52
-0.58
-0.01
USD90/bbl
USD100/bbl
-2.0
The analysis shows that ratings for the Middle East will be more negatively
impacted than CIS when oil prices fall below USD90/bbl. If oil prices fall to
USD70/bbl, the region will be downgraded to BB+ as would the CIS.
USD95/bbl
-1.5
-0.44
-0.43
-1.0
-0.25
-0.15
-0.10
0.0
-0.11
0.0
-0.5
Global EM
Source: BNP Paribas strategy research
Asia stands to benefit

most, with Korea in store
for a two-notch upgrade
A regional summary of our analysis of the impact of sustained oil shocks at various prices over
a three-year period on credit ratings can be seen in Figure 36 and Figure 37. In the event of a
sustained oil price of USD 80/bbl, Asian (ex-China) credit ratings stand to benefit most, with the
region marked for a full notch upgrade (0.99 notches) to A3/A-. The country-specific impact on
ratings is in Figure 38 and shows that Korea, Singapore and Thailand gain most benefit. Korea
would be upgraded two notches, on a[verage, within three years. Thailand would be upgraded
by 1.4 notches and, as it already has split ratings (A2/BBB+/BBB+; Moodys/S&P/Fitch), twonotch upgrades may be more likely to come by the agencies that report later.
EM Europe will also

benefit, with Czech
Republic, Slovakia and
Slovenia seeing the best
upgrade potential. Not so
Bulgaria, where lower
energy costs will not
benefit consumption or
corporate profits as much
Emerging European economies (not including the CIS) are also flagged to benefit from
improved credit quality, despite their export exposure to Russia. A sustained oil price of USD
80/bbl would benefit the regions credit quality by 0.8 notches. The Czech Repbulic, Slovakia
and Slovenia would benefit most, with a full rating upgrade. Turkey would closely follow, with a
predicted 0.8 notch upgrade. Bulgarias ratings are least positively affected, only benefiting from
a 0.5 notch upgrade. Although the country is among the least exposed to trade with energy
names (only 6.2% of exports), energy spending accounts for only a small proportion of its
inflation and consumption basket. Industry accounts for only 28% of GDP. So, the benefits of
better disposable income and lower production costs do not translate as strongly into growth.
Combined with the impact

of sanctions, Russia
would see a two-notch
downgrade, should oil
drop below USD 75/bbl.
Our analysis does not account for the effects of sanctions on Russia. It only reflects the credit
ratings hit from lower oil revenue (and/or expenditures) on key rating measures. As might be
expected for Russia, the impact is negative, with the sovereign rating in store for a 0.6 notch
downgrade with oil at USD 80/bbl and a full notch if oil hits USD 60/bbl. Compounded with the
likely credit pressure from the countrys reduced access to capital (a key ratings driver), we
would probably at least double the ratings-pressure from oil alone. This means a two-notch
downgrade if oil drops below USD 75/bbl. Elsewhere in the CIS, Belarus seems to benefit most
(after Ukraine). This is surprising, given the strong trade relationship it has with Russia, but
seems to be related to the reduced current account costs of lower energy imports and better
domestic consumption.
Figure 37: Impact on regional credit ratings from three-year sustained crude price shock (GDP weighted)
Current ratings
Asia ex-China
China
Latam
EM Europe
CIS
Middle East
Africa
Global EM
Moody'
s
Baa1
Aa3
Baa3
Baa1
Baa3
Baa2
Ba3
Baa1
S&P
BBB+
AABBBBBB+
BBBBBB
BBBBB+
Fitch
BBB+
AABBBBBB+
BBBBBB
BBBBB+
Implied credit notch impact ("1" = one ratings notch)

Numeric
score USD10 USD95/ USD90/ USD85/ USD80/ USD75/ USD70/ USD60/
(avg)*
0/bbl
bbl
bbl
bbl
bbl
bbl
bbl
bbl
11.49
0.1
0.3
0.6
0.8
1.0
1.3
1.5
1.9
14.67
-0.4
-0.1
0.1
0.3
0.5
0.8
1.0
1.5
9.04
0.0
0.0
-0.1
-0.1
0.0
-0.1
-0.2
-0.2
11.31
0.0
0.2
0.4
0.6
0.8
1.1
1.3
1.7
9.44
-0.1
-0.2
-0.4
-0.5
-0.5
-0.8
-1.0
-1.2
10.13
0.1
-0.2
-0.4
-0.6
-0.7
-1.0
-1.3
-1.6
6.15
-0.2
-0.3
-0.4
-0.4
-0.5
-0.6
-0.6
-0.7
11.44
-0.1
0.0
0.1
0.2
0.3
0.4
0.5
0.7
*Numeric ratings score based on 0 18 scale where 18 = AAA. Source: BNP Paribas strategy research

London +44 207 595 8195
31 October 2014
20
Figure 38: Impact of three-year crude price shock on credit ratings

Current ratings
Region
Country
Asia -ex Japan

Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Latin America
Latin America
Latin America
Latin America
Latin America
Latin America
Latin America
Latin America
Latin America
Latin America
Latin America
Latin America
Latin America
Latin America
Latin America
Latin America
Latin America
Latin America
Latin America
Latin America
Emerging Europe
Emerging Europe
Emerging Europe
Emerging Europe
Emerging Europe
Emerging Europe
Emerging Europe
Emerging Europe
Emerging Europe
Emerging Europe
Emerging Europe
Emerging Europe
Emerging Europe
Emerging Europe
Emerging Europe
CIS
CIS
CIS
CIS
CIS
CIS
Africa
Africa
Africa
Africa
Africa
Africa
Africa
Africa
Africa
Africa
Africa
Africa
Africa
Middle East
Middle East
Middle East
Middle East
Middle East
Middle East
Middle East
Middle East
Middle East
Middle East
Middle East
Middle East
Middle East
Middle East
Cambodia
China
Hong Kong
India
Indonesia
Korea
Malaysia
Mongolia
Pakistan
Philippines
Seychelles
Singapore
Sri Lanka
Taiwan
Thailand
Vietnam
Argentina
Bolivia
Brazil
Chile
Colombia
Costa Rica
Cuba
Dom Rep
Ecuador
El Salvador
Guatemala
Honduras
Jamaica
Mexico
Nicaragua
Panama
Peru
T&T
Uruguay
Venezuela
Bulgaria
Croatia
Czech Republic
Estonia
Hungary
Latvia
Lithuania
Macedonia
Moldova
Poland
Romania
Serbia
Slovakia
Slovenia
Turkey
Azerbaijan
Belarus
Kazakhstan
Russia
Ukraine
Uzbekistan
Algeria
Angola
Botswana
Egypt
Gabon
Ghana
Ivory Coast
Kenya
Morocco
Nigeria
South Africa
Tunisia
Zimbabwe
Bahrain
Iran
Iraq
Israel
Jordan
Kuwait
Lebanon
Libya
Oman
Qatar
Saudi Arabia
Syria
UAE
Yemen
Moody'
s
S&P
Fitch
B2
NR
Aa3
AAAa1
AAA
Baa3
BBB-u
Baa3
BB+
Aa3
A+
A3
AB2
B+
Caa1
BBaa3
BBB
n/r
NR
Aaa
AAAu
B1
B+
Aa3
AA-u
Baa1
BBB+
B1
BBCaa1
SDu
n/r
BB
Baa2
BBBAa3
AABaa2
BBB
Ba1
BB
Caa2
Ba2
B+
Caa1
B+
Ba3
BBBa1
BB
B3
B
Caa3
BA3
BBB+
B3
n/r
Baa2
BBB
A3
BBB+
A
Baa1
Baa2
BBBCaa1
CCC+
Baa2
BBBBa1
BB
A1
AAA1
AABa1
BB
Baa1
ABaa1
An/r
BBB3
n/r
A2
ABaa3
BBBB1 BB- *A2
A
Ba1
ABaa3
BB+u
Baa3
BBBB3
BBaa2
BBB+
Baa2
BBBCaa3
CCC
n/r
n/r
n/r
n/r
Ba2
BBA2
ACaa1
Bn/r
BBB2
BB1
n/r
B1
B+
n/r
BBBBa3
BBBaa1
BBBBa3
NR
n/r
n/r
Baa2
BBB
n/r
n/r
n/r
n/r
A1
A+
B1
BBAa2
AA
B1
Bn/r
NR
A
A1
Aa2
AA
Aa3
AAn/r
n/r
Aa2
n/r
n/r
n/r
n/r
A+
AA+
BBBBBBAAAB+
n/r
BBBB+
AAA
BBA+
BBB+
BBWD
BBBBB
A+
BBB
BB+
B
B
BBBB
n/r
BBBB+
n/r
BBB
BBB+
n/r
BBBB
BBBBB
A+
A+
BB+
AABB+
NR
ABBBB+
A+
BBB+
BBBBBBn/r
BBB+
BBB
CCC
n/r
n/r
BBn/r
BBBB
B
B+
BBBBBBBB
BBn/r
BBB
n/r
n/r
A
n/r
AA
B
WD
n/r
n/r
AA
n/r
n/r
n/r
Implied credit notch impact ("1" = one ratings notch)

Numeric
score USD10 USD95/ USD90/ USD85/ USD80/ USD75/ USD70/ USD60/
(avg)*
0/bbl
bbl
bbl
bbl
bbl
bbl
bbl
bbl
4.00
14.67
17.33
9.00
8.67
14.67
12.00
4.67
2.50
9.33
5.00
18.00
5.50
14.67
11.00
5.67
1.00
6.50
9.67
14.67
10.00
7.67
1.00
5.33
3.67
6.00
7.33
3.50
2.33
11.33
3.00
10.00
11.33
12.00
9.33
2.67
9.33
7.33
14.33
14.33
7.67
11.67
11.67
7.00
3.00
12.33
9.00
5.00
13.33
10.33
8.67
9.00
3.00
10.67
9.67
1.00
n/r
n/r
6.33
12.50
2.67
6.00
3.67
4.50
5.00
9.00
6.00
10.00
6.00
n/r
10.00
n/r
n/r
13.67
5.50
16.00
4.00
n/r
13.50
16.00
15.33
n/r
16.00
n/r
0.1
-0.2
0.2
-0.4
0.0
0.9
0.0
0.1
-0.2
0.1
-0.1
0.5
-0.2
0.3
0.0
-0.2
0.0
0.2
0.4
0.0
-0.2
-0.2
0.0
0.0
-0.3
-0.1
-0.1
-0.1
0.0
-0.2
-0.2
-0.1
-0.1
0.2
-0.1
-0.4
-0.2
0.0
0.1
0.1
0.0
0.1
0.0
-0.1
-0.2
0.0
0.0
-0.1
0.1
0.1
-0.1
-0.3
-0.1
-0.4
-0.1
0.2
0.0
-0.6
-0.5
1.0
-0.2
-0.6
-0.4
-0.2
-0.3
0.0
-0.1
-0.2
-0.3
0.0
-0.1
0.2
-0.5
0.0
-0.2
0.1
-0.3
0.0
-0.4
0.2
0.3
-0.1
0.0
-0.1
0.4
0.0
0.4
-0.1
0.3
1.2
0.0
0.4
0.0
0.3
0.1
0.7
0.0
0.5
0.3
-0.3
0.0
0.5
0.4
0.3
-0.3
0.1
0.2
0.2
-0.4
0.2
0.2
0.1
0.2
-0.3
0.1
0.1
0.2
-0.1
0.1
-0.6
-0.2
0.2
0.4
0.4
0.2
0.4
0.3
0.1
0.0
0.1
0.2
0.0
0.4
0.4
0.1
-0.8
0.2
-0.7
-0.3
0.5
0.0
-1.0
-1.0
1.2
-0.1
-1.1
-0.4
-0.2
0.0
0.2
-0.3
0.0
-0.3
0.0
-0.2
0.0
-0.7
0.2
-0.1
-0.4
-0.2
0.0
-0.8
0.0
-0.2
0.1
-0.2
-0.2
0.7
0.2
0.6
0.1
0.6
1.4
-0.1
0.7
0.2
0.6
0.3
1.0
0.2
0.8
0.7
-0.4
-0.1
0.9
0.3
0.6
-0.5
0.3
0.5
0.4
-0.6
0.4
0.4
0.4
0.5
-0.5
0.3
0.3
0.4
-0.4
0.4
-1.0
-0.2
0.4
0.8
0.7
0.3
0.7
0.5
0.2
0.3
0.3
0.4
0.2
0.7
0.8
0.4
-1.7
0.4
-1.1
-0.5
0.9
0.0
-1.5
-1.4
1.5
0.0
-1.9
-0.4
-0.3
0.2
0.4
-0.5
0.3
-0.4
0.0
-0.3
-0.2
-0.9
0.3
0.1
-1.1
-0.1
0.0
-1.4
-0.2
-0.7
0.3
-0.4
-0.2
0.9
0.5
0.8
0.3
0.8
1.7
-0.1
1.0
0.4
0.8
0.5
1.2
0.4
1.1
1.0
-0.5
-0.1
1.1
0.3
0.8
-0.6
0.6
0.7
0.7
-0.7
0.6
0.6
0.6
0.7
-0.5
0.5
0.5
0.6
-0.5
0.6
-1.1
-0.2
0.5
1.1
1.0
0.5
1.0
0.7
0.3
0.5
0.5
0.5
0.4
1.0
1.1
0.6
-2.0
0.6
-1.3
-0.5
1.2
0.0
-1.9
-1.9
1.7
0.0
-2.2
-0.4
-0.3
0.4
0.6
-0.6
0.5
-0.4
0.0
-0.4
-0.4
-1.1
0.4
0.2
-1.3
0.0
0.0
-1.7
-0.3
-1.1
0.5
-0.4
-0.3
1.2
0.7
1.0
0.5
1.0
1.9
-0.1
1.3
0.6
1.0
0.7
1.4
0.6
1.3
1.2
-0.4
-0.1
1.3
0.3
1.1
-0.6
0.8
0.9
0.9
-0.8
0.9
0.8
0.8
0.9
-0.5
0.7
0.7
0.9
-0.5
0.8
-1.1
-0.3
0.7
1.4
1.3
0.6
1.2
0.9
0.5
0.7
0.6
0.7
0.6
1.3
1.3
0.8
-2.2
0.8
-1.4
-0.6
1.5
0.0
-2.3
-2.3
1.9
0.0
-2.3
-0.4
-0.3
0.6
0.8
-0.6
0.8
-0.4
0.0
-0.4
-0.5
-1.3
0.5
0.3
-1.3
0.1
0.0
-1.7
-0.3
-1.2
0.7
-0.5
-0.4
1.5
0.9
1.3
0.8
1.4
2.1
-0.1
1.7
0.8
1.3
0.9
1.7
0.8
1.6
1.6
-0.6
-0.1
1.7
0.3
1.4
-0.8
1.1
1.2
1.1
-1.0
1.1
1.0
1.0
1.2
-0.8
0.9
1.0
1.1
-1.0
1.1
-1.7
-0.2
0.8
1.8
1.6
0.8
1.6
1.2
0.6
0.9
0.8
0.9
0.8
1.6
1.7
1.1
-3.2
1.1
-1.9
-0.8
1.9
0.0
-2.8
-2.8
2.1
0.2
-3.3
-0.4
-0.4
0.8
1.1
-0.9
1.0
-0.5
0.0
-0.6
-0.7
-1.5
0.6
0.4
-2.2
0.2
-0.1
-2.5
-0.5
-1.9
0.9
-0.7
-0.5
1.8
1.2
1.5
1.0
1.7
2.4
-0.2
2.0
1.0
1.5
1.1
2.0
1.0
1.9
1.9
-0.7
-0.1
2.1
0.2
1.7
-1.0
1.3
1.5
1.3
-1.1
1.4
1.3
1.3
1.5
-1.0
1.2
1.2
1.3
-1.3
1.3
-2.1
-0.2
1.0
2.2
2.0
1.0
1.9
1.5
0.7
1.1
0.9
1.1
1.0
1.9
2.0
1.4
-4.1
1.3
-2.3
-1.0
2.3
0.0
-3.2
-3.2
2.3
0.3
-4.0
-0.4
-0.5
1.0
1.3
-1.1
1.3
-0.6
0.0
-0.7
-0.9
-1.7
0.8
0.5
-3.0
0.3
-0.1
-3.2
-0.7
-2.5
1.1
-0.9
-0.6
2.4
1.6
2.0
1.5
2.2
2.9
-0.2
2.6
1.4
2.0
1.4
2.4
1.4
2.4
2.5
-0.8
-0.1
2.6
0.2
2.2
-1.2
1.8
2.0
1.8
-1.4
1.8
1.7
1.7
1.9
-1.2
1.6
1.6
1.8
-1.7
1.8
-2.5
-0.3
1.3
2.8
2.6
1.3
2.5
1.9
1.0
1.6
1.2
1.5
1.3
2.5
2.7
1.9
-5.0
1.8
-2.8
-1.3
3.0
0.0
-4.0
-4.1
2.8
0.4
-4.9
-0.4
-0.5
1.4
1.8
-1.3
1.8
-0.7
0.0
-0.9
-1.3
-2.1
1.0
0.7
-3.7
0.5
-0.1
-3.8
-0.9
-3.3
1.5
-1.1
-0.7
*Numeric ratings score based on 0 18 scale where 18 = AAA. For countries with no rating, BNP Paribas assessment used. Analysis of direct impact of a crude oil
price shock on credit ratings scores. Analysis does not make adjustments for non-oil related drivers such as potential domestic fiscal or monetary policy response or
changed political or other economic risks (such as sanctions).Source: BNP Paribas strategy research

London +44 207 595 8195
31 October 2014
21
Figure 39: Impact of USD 80/bbl oil price over three years on credit ratings (1 = one ratings notch)
3
2
1
0
-1
-2
-3
-4
Credit ratings imparement.
Credit ratings improvements.
Angola
Gabon
Algeria
Azerbaijan
Oman
Kazakhstan
Iraq
Kuwait
Saudi Arabia
Venezuela
Ecuador
Nigeria
Russia
Colombia
T&T
Mexico
Iran
Vietnam
UAE
Tunisia
Yemen
Ghana
Bahrain
Ivory Coast
Qatar
Malaysia
Argentina
Libya
Egypt
Uzbekistan
Zimbabwe
Lebanon
Jordan
Brazil
Macedonia
Bulgaria
India
Israel
China
Kenya
Serbia
Pakistan
Sri Lanka
Poland
Hungary
Romania
Croatia
Seychelles
Moldova
Panama
Syria
Nicaragua
South Africa
Honduras
Costa Rica
Guatemala
Uruguay
Turkey
Morocco
El Salvador
Dom Rep
Belarus
Peru
Lithuania
Jamaica
Cuba
Hong Kong
Philippines
Indonesia
Chile
Cambodia
Latvia
Slovakia
Estonia
Mongolia
Taiwan
Bolivia
Slovenia
Thailand
Singapore
Czech Republic
Ukraine
Botswana
Korea
-5
USD80/bbl
USD70/bbl
Have markets appropriately priced in the risks?

Markets are forward looking and the oil-shock may already be priced in. We examine market
activity since 30 June in the sovereigns listed in Figure 41, comparing their current levels with
appropriate various oil shocks scenarios. The results are summarised in Figure 40 and scaled in
order of rich and cheap, at levels for ten-year bonds on 30 October.
Although a country may
be flagged for upgrade, it
may still be trading rich,
as with Czech Republic
It is noteworthy that although some sovereigns are flagged for upgrades in Figure 38, they
nevertheless appear rich. The Czech Republic is 28bp rich even through our ratings model
indicates the country is in store for a 1.4 notch upgrade within three years, given an USD 80/bbl
oil price environment.
Gabon, Iraq, Angola and

Azerbaijan all appear rich
Some market moves appear justified, with selling in Gabon, Iraq, Angola and Azerbaijan moving
in the right direction, assuming oil is at USD 80/bbl. It is surprising that Ghana appears fairly
valued as it is an energy producer which would see a 0.4-notch rating impairment. That said,
9bp for a B- credit is not even one standard deviation from the ratings trend. So, without IMF
funding, it could be argued that the sovereign is closer to rich.
Russia is one example where our oil-driven model does not fully account for other credit risks
that may come to bear on the country's rating and spreads. Were we to double the 0.6 notch
impairment the Federation 23 would be 101bp cheap. The impact of reduced liquidity and
ongoing political risk would likely require further discounting.
Although Mexico is rich,

the impact of recent
reforms are not reflected
in the model and the
sovereign is likely to be
fairly valued
Mexico is similar, flagged as 28bp rich at the moment. However, this is based on the 0.5-notch
rating impairment from a USD 80/bbl oil price envioronment. Since the model does not account
for the improved political risks thanks to President Pina Nietos reform initiative, it is probable
that no downgrade will be in store for the country and spreads are currently fairly valued,
possibly even still a bit cheap. But, if oil prices fell to USD60/bbl, Mexicos risk premiums
should be 43bp wider than present.

London +44 207 595 8195
31 October 2014
22
100
50
Russia provides an example where our oil-driven

model does not fully account for additional credit risks
that may come to bear the country's ratings and
spreads.
Some market moves appear justified, with selling in

Gabon, Iraq, Angola and Mexico moving in the right
direction, assuming a USD80/bbl oil environment.
90
83
82
66
56
48
40
31
29
28
28
27
27
18
16
10
9
9
9
8
7
6
4
4
1
0
150
139
Figure 40: Rich(+) and cheap(-) current market spreads (in bp) in USD 80/bbl oil price enviornmnet
200
-100
-150
'Rich' sovereign credits
-1
-2
-2
-3
-3
-4
-10
-11
-12
-13
-16
-17
-17
-18
-19
-24
-27
-29
-31
-36
-45
-60
-69
-82
-83
-87
-101
-105
0
-50
Secondary market spreads are 'Cheap' on a forward looking basis.
Gabon
Vietnam
Iraq
Azerbaijan
Serbia
Angola
Lebanon
Ivory Coast
T&T
Ecuador
Mexico
Czech Republic
Nigeria
Jamaica
Israel
Colombia
Lithuania
Kazakhstan
Romania
Ghana
Korea
Poland
Latvia
Guatemala
Philippines
Bolivia
South Africa
Honduras
Uruguay
Sri Lanka
Hungary
Dom Rep
Chile
Indonesia
Bulgaria
Qatar
China
Slovakia
Brazil
Morocco
Pakistan
Peru
Panama
Turkey
Kenya
Bahrain
Croatia
Belarus
Macedonia
Slovenia
Mongolia
Costa Rica
El Salvador
Russia
Argentina
Ukraine
-200
Forward looking 'Rich' (+)/'Cheap'(-)
Change since 30 Jun
Assumes Argentina exits 'default' status. Fundamentals warrant a B+ rating today. Assumes no default for Venezuela. Source: EM Strategy desk estimates and
forecasts

London +44 207 595 8195
31 October 2014
23
Figure 41: Implied rich/cheap analysis

Theoretical 10Y bond spread impact of ratings change
Region
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Asia -ex Japan
Latin America
Latin America
Latin America
Latin America
Latin America
Latin America
Latin America
Latin America
Latin America
Latin America
Latin America
Latin America
Latin America
Latin America
Latin America
Latin America
Latin America
Latin America
Latin America
Latin America
Emerging Europe
Emerging Europe
Emerging Europe
Emerging Europe
Emerging Europe
Emerging Europe
Emerging Europe
Emerging Europe
Emerging Europe
Emerging Europe
Emerging Europe
Emerging Europe
Emerging Europe
Emerging Europe
Emerging Europe
CIS
CIS
CIS
CIS
CIS
CIS
Africa
Africa
Africa
Africa
Africa
Africa
Africa
Africa
Africa
Africa
Africa
Africa
Africa
Middle East
Middle East
Middle East
Middle East
Middle East
Middle East
Middle East
Middle East
Middle East
Middle East
Middle East
Middle East
Middle East
Middle East
Country
Cambodia
China
Hong Kong
India
Indonesia
Korea
Malaysia
Mongolia
Pakistan
Philippines
Seychelles
Singapore
Sri Lanka
Taiwan
Thailand
Vietnam
Argentina
Bolivia
Brazil
Chile
Colombia
Costa Rica
Cuba
Dom Rep
Ecuador
El Salvador
Guatemala
Honduras
Jamaica
Mexico
Nicaragua
Panama
Peru
T&T
Uruguay
Venezuela
Bulgaria
Croatia
Czech Republic
Estonia
Hungary
Latvia
Lithuania
Macedonia
Moldova
Poland
Romania
Serbia
Slovakia
Slovenia
Turkey
Azerbaijan
Belarus
Kazakhstan
Russia
Ukraine
Uzbekistan
Algeria
Angola
Botswana
Egypt
Gabon
Ghana
Ivory Coast
Kenya
Morocco
Nigeria
South Africa
Tunisia
Zimbabwe
Bahrain
Iran
Iraq
Israel
Jordan
Kuwait
Lebanon
Libya
Oman
Qatar
Saudi Arabia
Syria
UAE
Yemen
USD100/ USD95/ USD90/ USD85/ USD80/ USD75/ USD70/ USD60/

bbl
bbl
bbl
bbl
bbl
bbl
bbl
bbl
2.4
27.7
7.4
-12.9
-30.4
-46.3
-64.7
-81.3
1.6
10.8
8.1
5.4
3.0
0.7
-1.7
-4.0
2.0
6.4
4.9
3.3
1.9
0.7
-0.8
-2.1
1.5
39.3
31.8
23.7
17.7
12.6
4.6
-2.2
2.2
29.6
20.6
11.3
3.9
-2.6
-11.2
-18.9
2.9
4.7
2.4
0.1
-2.0
-3.9
-6.0
-8.0
-0.2
22.4
22.9
23.6
23.9
24.0
24.9
25.6
2.6
46.2
26.1
6.1
-10.9
-26.1
-44.0
-60.0
1.4
111.2
90.1
69.1
50.1
32.5
13.0
-5.1
2.0
30.9
24.4
17.9
12.1
6.9
0.8
-4.7
1.4
34.5
23.0
11.5
1.1
-8.6
-19.5
-29.6
2.4
2.2
0.7
-0.8
-1.9
-2.8
-4.3
-5.6
1.4
41.6
29.5
17.4
6.6
-3.4
-14.7
-25.2
2.4
8.4
5.5
2.5
0.1
-2.0
-4.8
-7.3
2.5
25.5
18.9
12.1
6.8
2.1
-4.1
-9.6
-0.8
59.5
63.5
69.6
71.6
71.5
79.9
86.3
-0.1
13.5
14.9
17.0
17.7
17.7
20.6
22.7
2.6
21.6
8.2
-6.4
-16.7
-25.0
-39.1
-50.9
0.2
14.7
15.3
16.3
16.6
16.6
17.9
18.8
2.2
14.2
11.2
8.2
5.6
3.2
0.5
-2.0
-1.2
35.9
39.2
44.1
46.0
46.3
53.1
58.4
1.8
52.0
42.0
32.0
23.3
15.4
6.2
-2.1
2.0
-76.2 -107.7 -138.7 -166.7 -192.7 -220.7 -246.7
1.8
30.6
17.6
4.4
-7.1
-17.6
-29.9
-41.1
-1.4
84.4
95.8
110.9
119.5
124.7
144.3
160.9
1.8
61.4
49.1
36.7
26.0
16.3
4.7
-5.9
1.7
37.8
28.8
19.9
11.7
4.0
-4.1
-11.8
1.7
83.7
64.8
46.0
29.3
13.8
-3.5
-19.4
1.9
108.1
83.4
58.2
37.2
18.5
-5.1
-26.3
-1.2
28.5
31.2
35.5
36.8
36.5
42.7
47.4
1.6
132.4
112.2
92.0
74.1
57.5
38.9
21.6
1.6
41.5
35.7
29.9
24.7
20.0
14.6
9.6
1.8
26.1
21.3
16.6
12.4
8.5
4.2
0.2
-1.7
31.0
35.2
41.4
43.9
44.5
53.5
60.8
1.8
44.7
37.9
31.0
25.1
19.7
13.3
7.4
-2.5
76.2
103.4
146.6
202.1
485.4
902.7 1388.1
-0.3
41.4
41.5
40.8
41.6
43.2
41.7
41.0
1.3
56.8
50.2
43.2
37.4
32.2
25.4
19.2
2.8
17.5
13.5
9.5
6.2
3.2
-0.3
-3.5
2.6
14.3
10.7
7.1
4.0
1.3
-1.9
-4.8
1.3
64.6
58.5
52.1
46.7
42.0
35.6
29.9
2.5
26.9
21.4
15.9
11.1
6.9
1.9
-2.6
1.9
22.9
18.5
13.7
10.2
7.4
2.6
-1.5
1.0
27.1
21.1
15.0
9.6
4.5
-1.4
-7.0
1.6
132.8
113.0
93.3
75.6
59.1
40.9
24.0
1.2
30.2
27.5
24.7
22.4
20.4
17.6
15.1
1.5
59.6
54.0
48.4
43.3
38.6
33.3
28.3
1.3
93.6
82.0
70.2
59.9
50.5
39.3
28.9
2.5
20.5
16.3
12.2
8.6
5.4
1.7
-1.7
2.7
33.5
25.9
18.3
11.9
6.2
-0.6
-6.6
1.9
42.8
34.5
26.1
18.9
12.3
4.6
-2.4
-5.0
26.1
46.7
79.3
94.9
100.5
154.4
203.9
1.8
46.2
25.9
4.1
-12.3
-25.9
-47.6
-66.2
-2.8
30.8
38.6
49.8
55.6
58.5
74.5
88.4
-1.3
35.4
39.6
45.8
48.4
49.1
57.6
64.4
3.0
30.8
-11.6
-57.5
-88.8 -112.9 -157.0 -192.9
0.0
29.1
29.1
29.1
29.1
29.1
29.1
29.1
-4.0
-3.5
2.1
8.3
14.9
22.0
29.7
38.0
-4.1
68.3
94.0
122.0
151.8
183.7
219.5
258.0
2.8
2.6
-0.4
-3.4
-6.1
-8.6
-11.4
-14.0
0.4
91.3
84.0
71.5
69.7
72.9
55.7
43.9
-4.9
60.5
93.4
145.5
169.3
176.6
260.8
336.7
-0.4
115.1
114.9
113.6
114.4
116.3
113.9
112.6
-0.5
154.9
157.9
162.2
164.0
164.4
170.1
174.5
1.4
84.1
70.5
56.9
44.6
33.2
20.6
8.9
1.8
28.0
21.2
14.2
8.3
3.1
-3.6
-9.6
-1.3
65.8
73.7
84.2
90.3
94.1
107.7
119.3
1.8
36.6
29.9
23.1
17.4
12.2
5.9
0.2
-0.7
87.2
90.1
94.2
96.0
96.5
101.9
106.1
0.0
118.9
118.9
118.9
118.9
118.9
118.9
118.9
-0.9
32.9
35.5
39.9
41.0
40.4
46.6
51.3
-1.3
13.2
19.8
27.3
33.6
39.5
48.4
56.9
-2.1
398.4
415.6
433.7
451.9
470.3
490.9
512.0
1.0
13.0
11.3
9.6
8.2
6.9
5.2
3.6
0.7
110.4
103.6
96.5
90.6
85.3
78.0
71.4
-3.7
5.9
10.3
17.8
20.2
19.7
31.9
42.3
0.5
79.9
72.1
64.0
56.7
49.9
42.0
34.5
-0.1
58.5
59.7
60.9
62.1
63.3
64.6
65.8
-3.8
21.4
28.2
38.9
43.4
44.4
61.0
75.5
-0.9
5.3
6.6
8.4
9.1
9.1
11.7
13.8
-3.3
4.5
9.0
15.4
19.2
21.6
31.2
39.9
1.5
8.7
2.3
-3.7
-9.7
-15.7
-21.0
-26.2
-1.1
-25.6
-24.3
-22.3
-21.5
-21.4
-18.7
-16.5
-0.7
45.7
52.9
60.3
67.8
75.3
83.0
90.8
After ratings and market

adjustment
for USD80/bbl oil
Actual market move for bond spreads

(10Y where available*)
30-Jun
-77
--212
39
-497
527
149
--321
--225
623
241
146
68
141
248
-326
519
361
250
446
483
88
-157
121
79
151
858
175
258
43
-196
112
101
327
-94
156
276
103
172
222
182
526
-199
652
--329
--257
611
365
384
184
285
195
--208
-422
77
--370
--60
-----
Spread
30-Oct change
--76
-2
----173
-40
43
4
--446
-51
522
-5
142
-7
----304
-17
----205
-20
503
-120
223
-18
172
26
62
-6
154
13
272
23
--336
10
490
-29
352
-9
209
-41
411
-35
464
-20
107
20
--161
3
126
5
89
11
153
2
1288
430
193
18
254
-4
30
-13
--211
15
88
-24
89
-12
300
-27
--87
-7
154
-2
264
-13
87
-17
185
13
214
-8
184
2
492
-35
167
-274
75
840
188
----374
45
----314
58
570
-41
379
14
358
-26
176
-8
315
30
182
-14
----196
-12
--453
31
59
-18
----375
5
----70
11
---------
Rich'
(+)/'Cheap'
(-) on
current
rating
--6
--22
27
-10
35
31
--30
--69
216
59
-8
8
0
-56
-49
-34
-45
35
59
109
16
--6
-2
21
21
-730
-20
-10
44
-20
29
27
-41
-17
30
100
1
-39
2
0
20
-29
-117
-121
---85
---8
-29
17
5
8
-8
25
---41
--22
24
--56
---15
-----
Market
move (for
similar
rated 10Y
sov)
48
-32
-47
12
12
-32
-48
56
12
41
-54
34
-32
-3
26
70
26
4
-32
4
19
70
41
48
34
26
48
63
-3
56
4
-3
-10
12
63
12
26
-25
-25
19
-10
-10
26
56
-10
12
41
-18
4
19
12
56
-4
70
41
-32
34
-18
-34
56
41
41
12
34
19
34
26
4
19
48
-25
34
-40
48
78
-25
-40
-32
12
-56
Implied
ratings
change
1.2
0.7
1.0
0.5
1.0
1.9
-0.1
1.3
0.6
1.0
0.7
1.4
0.6
1.3
1.2
-0.4
-0.1
1.3
0.3
1.1
-0.6
0.8
0.9
0.9
-0.8
0.9
0.8
0.8
0.9
-0.5
0.7
0.7
0.9
-0.5
0.8
-1.1
-0.3
0.7
1.4
1.3
0.6
1.2
0.9
0.5
0.7
0.6
0.7
0.6
1.3
1.3
0.8
-2.2
0.8
-1.4
-0.6
1.5
0.0
-2.3
-2.3
1.9
0.0
-2.3
-0.4
-0.3
0.6
0.8
-0.6
0.8
-0.4
0.0
-0.4
-0.5
-1.3
0.5
0.3
-1.3
0.1
0.0
-1.7
-0.3
-1.2
0.7
-0.5
-0.4
Other 'Rich' (+)/'Cheap'(-) scenarios
Implied
Rich'
10Y
(+)/'Chea USD100 USD90/ USD70/ USD60/
spread
p'(-)
/bbl
bbl
bbl
bbl
351
-----62
-13
-3
-8
-18
-22
37
-----169
-----163
-10
23
4
-26
-39
51
8
17
12
4
0
112
-----364
-82
3
-44
-121
-154
504
-18
59
18
-55
-87
146
4
28
15
-8
-18
325
-----31
-----302
-2
42
19
-24
-42
56
-----106
-----295
90
80
89
103
108
398
-105
220
224
229
231
224
1
48
20
-25
-42
156
-17
-18
-17
-14
-13
58
-4
7
1
-10
-14
170
16
6
14
28
34
188
-83
-49
-68
-100
-113
612
-----333
-3
50
21
-30
-52
519
29
-11
15
64
86
265
-87
-42
-67
-109
-127
213
4
38
20
-12
-25
410
-1
68
31
-33
-61
491
27
114
66
-17
-52
135
28
20
27
39
43
453
-----137
-24
-2
-14
-34
-43
107
-19
-1
-11
-28
-35
121
31
18
28
48
56
151
-2
23
10
-14
-25
848
-440
-695
-625
1888
2958
183
-11
-13
-13
-13
-12
218
-36
-12
-25
-49
-60
58
28
42
34
21
15
59
-----208
-3
20
7
-15
-25
94
6
27
16
-3
-11
100
10
26
17
1
-5
239
-60
-38
-50
-72
-82
455
-----94
7
17
12
2
-3
163
9
30
18
-2
-11
330
66
108
85
45
26
71
-16
0
-9
-23
-29
116
-69
-41
-56
-82
-92
188
-27
-22
-38
-66
-78
266
82
8
61
184
250
447
-45
26
-15
-84
-113
176
9
-19
0
39
57
173
-101
-114
-104
-86
-78
561
-279
-140
-226
-357
-408
336
-----103
-----430
56
-58
-5
128
212
73
-----544
-----453
139
25
109
295
390
579
9
7
5
4
5
418
40
30
37
50
54
329
-29
21
-6
-53
-74
159
-17
8
-6
-30
-40
342
27
-1
17
52
68
182
0
33
15
-16
-29
331
-----272
-----164
-31
-39
-32
-20
-16
229
-----536
83
13
48
124
166
76
18
24
20
14
11
319
-----69
-----423
48
78
62
33
20
-----115
-----58
-12
-16
-13
-7
-5
77
-----171
-----60
-----530
------
Closest available 10Y bond used. Otherwise: Argentina Par, Belarus 18, Czech 22, Angola 19, Macedonia 24, China 27, UAE 19, Bahrain 22, Bolivia 22, Congo
29, Chile 22, DR 27, Ivory Coast 28, Morocco 22, Serbia 21, Zambia 22.
Numeric ratings score based on 0 18 scale where 18 = AAA. For countries with no rating, BNP Paribas assessment used. Analysis of direct impact of a crude oil
price shock on credit ratings scores. Source: BNP Paribas strategy research

London +44 207 595 8195
31 October 2014
24
Emerging Markets Strategy Contacts

Piotr Chwiejczak
FX & IR CEEMEA Strategist
London
44 20 7595 8715
piotr.chwiejczak@uk.bnpparibas.com
David Spegel
Global Head of Sovereign and

Credit Strategy
London
44 20 7595 8195
david.spegel@uk.bnpparibas.com
Erkin Isik
FX & IR CEEMEA Strategist
Istanbul
90 (216) 635 2987
erkin.isik@teb.com.tr
Mirza Baig
Head of FX & IR Asia Strategy
Singapore
65 6210 3262
mirza.s.baig@asia.bnpparibas.com
Jasmine Poh
FX & IR Asia Strategy
Singapore
65 6210 3418
jasmine.j.poh@asia.bnpparibas.com
Yii Hui Wong
Singapore
65 6210 3314
yiihui.wong@asia.bnpparibas.com
Jennifer Kusuma
Singapore
65 6210 3263
jennifer.kusuma@asia.bnpparibas.com
Gabriel Gersztein
Head FX & IR Latam Strategy
Sao Paulo
55 11 3841 3421
gabriel.gersztein@br.bnpparibas.com
Thiago Alday
FX & IR Latam Strategist
Sao Paulo
55 11 3841 3445
thiago.alday@br.bnpparibas.com
James Z Hao
FX & IR Latam Strategist
New York
1 917 472 4333
james.z.hao@us.bnpparibas.com
Damien Botton
LATAM Credit Strategy
Sao Paulo
55 11 3841 3251
damien.botton@br.bnpparibas.com
Emerging Markets Sector Specialists Contacts

Tatiana Tchembarova
Sector Specialist
London
44 20 7595 1251
tatiana.tchembarova@uk.bnpparibas.com
Ray Heung
Head Asia Credit Strategy
Hong Kong
852 2108 5283
ray.heung@asia.bnpparibas.com
Susan Chie
Asia Credit Strategy
Hong Kong
852 2108 5290
susan.chie@asia.bnpparibas.com
Rahul Gupta
Hong Kong
852 2108 5257
rahul.gupta@asia.bnpparibas.com
Tony H Chen
Hong Kong
852 2108 5284
tony.h.chen@asia.bnpparibas.com
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Barbara Consuelo, London. Tel: 44 20 7595 8486, Email: barbara.consuelo@uk.bnpparibas.com
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This publication is classified as non-objective research

Energy price shock scenarios: Impact on EM ratings,

The stronger US dollar is having an inverse impact on dollar-denominated commodity

The implications of reduced recycled petrodollars has significant ramifications for

Our country-by-country analysis addresses changed industrial production costs, the

Oil revenues, fuel subsidies, breakeven prices and government budgets

Oil and gas subsidies (pages 8-10)

Impact on inflation and growth for energy exporters (pages 11-13)

The big picture: Impact on EM as a whole (pages 16-17)

The impact of oil volatility on EM credit ratings (pages 18-21)

Have markets appropriately priced in the risks? (pages 22-24)

David Spegel Global Head of EM Sovereign & Credit Strategy

This publication is classified as non-objective research

The impact of the energy

Source: BNP Paribas strategy desk analysis and forecasts

The implications for

Ratings in CIS fare worst, unless oil prices

Figure 2: Impact of oil price at USD 80/bbl on EM credit

Figure 1: Impact of oil price at USD 80/bbl on 2015

Have you noticed a reduction of financial markets liquidity?

For the first time in 18

David Spegel Global Head of EM Sovereign & Credit Strategy

This publication is classified as non-objective research

Figure 3: EM energy exporter outward capital flow USDbn

Figure 4: EM energy exporter C/A balances USDbn

The recycling of petro-dollars has benefited

The declining Current Account surpluses among

Asia -ex Japan

2014f outward portfolio flows

2014f outward direct investment

2014f other capital flows

YoY estimated decline

Source: BNP Paribas strategy desk analysis and forecasts

Asia -ex Japan

Source: BNP Paribas strategy desk analysis and forecasts

Figure 5: Annual net exported savings by EM energy exporters USDbn

For the first time in eighteen years, we estimate

Source: BNP Paribas strategy desk analysis and forecasts

Defining the scope of the issue

David Spegel Global Head of EM Sovereign & Credit Strategy

This publication is classified as non-objective research

Figure 6: Value of USD and oil prices

The improved international value of the US dollar is having

Figure 7: World GDP breakdown (2013)

WTI USD/bbl (lhs)

DXY trade weighted dollar (rhs)

DXY scale inverted. Source: Bloomberg

EM Oil & Gas

Source: World Bank and BNP Paribas strategy desk

Figure 8: EM gross external debt outstanding

Figure 9: Universe of external bonds by sector

Source: National sources and BNP Paribas strategy desk

Figure 10: USD 80bbl: lost exports as

Source: BNP Paribas strategy desk

Figure 11: Cost per barrel USD/bbl

Lower cost Upper cost Avg cost

Source: BNP Paribas strategy estimates

David Spegel Global Head of EM Sovereign & Credit Strategy

This publication is classified as non-objective research

Figure 12: Lost export revenue analysis

Cost of production USD/bbl

Oil profits (ex-tax)

Lost export revenue USDbn