Sovereign ratings in Southeast Asia are under risk due to the Middle East conflict. Fiscal and external metrics underpinning the ratings will be strained if the global energy market does not begin to normalise in the next few months, the credit rating agency noted.

Prolonged energy disruptions will raise fiscal and external pressures on Southeast Asian nations, according to S&P Global.
Indonesia is more vulnerable to weakening credit metrics if the war continues and energy prices remain high.
Vietnam’s strong economic growth, its booming export sector and relatively unencumbered government balance sheet will act as ballast against the energy market dislocation.

If the longer-term impact of the war is severe, the robust growth prospects of economies dependent on imported energy may also be impaired, weakening economic support for the ratings, it said.

Its base case assumes the war’s intensity will peak and the Strait of Hormuz’s effective closure will ease during April, but some disruptions are likely to persist for months.

A prolonged surge in the cost of energy imports—coupled with a loss of foreign exchange reserves—is one risk scenario that could materially weaken Vietnam’s external liquidity position, the credit rating agency said in a regulatory article.

And a sharp increase in the fiscal deficit, in the unlikely event that economic growth also decelerates abruptly, could also erode the government’s more favourable leverage profile, it noted.

If these scenarios persist beyond six months and the government is unable to mitigate the impact on credit metrics, they could erode Vietnam’s robust credit buffers at the current ratings level.

If the pressure on the economy causes capital outflows, the authorities may use foreign exchange reserves to support the exchange rate.

The budget deficit in the country could also widen if the energy disruption drags on. Outcomes will ultimately be tied to the duration of the conflict and the disruptions, it said

Meanwhile, the sovereign ratings on Indonesia (BBB/stable/A-2) are sensitive to weakening fiscal or external credit metrics resulting from the war.

Potential risks include higher energy prices raising budgetary subsidy payments, weighing on deficits; government interest payments rising if accelerating inflation fuels a further increase in market interest rates; and importing more expensive oil products widening the current account deficit (CAD).

The government’s response to the energy disruption may contain some of the damage to its fiscal performance, S&P Global Ratings noted. But, higher commodity prices could also boost government revenue. This helps to limit the increase in the size of the fiscal deficit and reduces upward pressures on the budgetary interest payment ratio.

Indonesian exports have grown this year, but the growth momentum is tempered by declining sales of energy products. With the sharp rebound in energy prices, Indonesian export growth could rise further to mitigate the increase in oil imports.

Overall, Indonesian credit metrics are likely to weaken marginally under the credit rating agency’s base case.

As a commodities exporter, Indonesia may see some mitigating developments offsetting some of the pressures on the sovereign ratings, particularly if there is a broad-based strengthening of commodities prices. This could help to turn around some of the worsening trend in the country’s credit metrics once the situation normalises.

Fibre2Fashion News Desk (DS)

The report titled ‘Impacts of the Conflict in the Middle East on African Economies’, cautions that African economies, which were slowly recovering from the severe consequences of COVID-19, the Russia-Ukraine war and rising trade tariffs, could be among the most affected by the ongoing conflicts in the Middle East.

Growth in African countries is projected to decline by up to 0.2 per cent this year due to the Middle East crisis, according to a joint policy document by the African Union Commission, the African Development Bank Group, the UN Economic Commission for Africa and the UN Development Programme.
The main effects of the conflicts on Africa include surging prices of hydrocarbons, food products and fertilisers.

Kevin Urama, chief economist and vice president for economic governance and knowledge management at AfDB who presented the report on the sidelines of the Spring Meetings of the International Monetary Fund and the World Bank in Washington, DC, recently, urged African governments not to panic or take hasty decisions that could harm their fiscal balances.

The main effects of Middle Eastern conflicts on African economies include surging prices of hydrocarbons, food products and fertilisers, noted the report.

“Eighty per cent of the oil imported into Africa comes from this region, as well as 50 per cent of refined petroleum,” said ECA executive secretary Claver Gatete.

The report recommends, in particular, strategic inflation management to ensure short-term price stability expectations. It cautions oil-exporting countries to adopt strict fiscal discipline by managing windfall revenues prudently, while strengthening debt-monitoring, and using energy reserves strategically.

Where fiscal space allows, it advises that temporary and targeted social protection measures be deployed to shield the most vulnerable populations from the crisis, added the report.

However, the report urged governments to avoid broad-based subsidies that could worsen long-term fiscal deficits, and to diversify sources of energy, inputs and food supplies.

It also recommends that African governments strengthen regional and intra-African trade in oil and fertiliser markets to enhance resilience; and ensure smooth inter-institutional coordination to harmonise strategic monetary and fiscal policies.

At the same time, the report calls upon development partners, multilateral banks and development finance institutions to provide emergency support to African countries through crisis response measures and technical assistance.

It also recommends a speedy operationalisation of the African Continental Free Trade Area (AfCFTA), while strengthening large-scale domestic capital mobilisation.

The report also suggested Africa to diversify its energy mix by accelerating investments in renewable energy and the gas sector.

Fibre2Fashion News Desk (DS)

The measures aimed at improving turnaround time, enabling early approvals and enhancing transparency and predictability under the Advance Authorisation (AA) scheme.

The Indian Ministry of Commerce & Industry has undertaken a series of targeted reforms to strengthen the functioning of norms committees under the Directorate General of Foreign Trade, it recently said.
The measures—aimed at improving turnaround time, enabling early approvals and enhancing transparency and predictability under the Advance Authorisation scheme—have resulted in improved outcomes.

DGFT administers the AA scheme and the Duty-Free Import Authorisation (DFIA) scheme under the Foreign Trade Policy. These schemes allow duty-free import of inputs that are physically incorporated in export products.

Authorisations are generally issued against notified standard input-output norms (SION). In cases where SION is not available, authorisations are issued based on self-declared input-output norms by applicants, which are subsequently examined and finalised by sector-specific NCs.

At present, seven NCs are operational under DGFT, covering a range of export sectors. These comprise technical authorities and domain experts from relevant ministries and departments. They are responsible for fixation of SION and ad-hoc norms, recommending SION notifications and facilitating issuance of authorisations in accordance with the Foreign Trade Policy and handbook of procedures.

The functioning of NCs had been affected by capacity constraints due to a limited number of technical authorities. As of early February 2026, only twelve technical members were associated with the committees, including five serving government officers, resulting in increasing pendency due to overlapping responsibilities.

To address these challenges, a series of reforms have been introduced. These include strengthening of governance and processes; augmentation of technical capacity; and a special disposal drive for expeditious disposal of pending applications.

Detailed guidelines have been issued to ensure uniformity and consistency in the functioning of NCs. These include institutionalised scheduling of meetings on a fixed fortnightly cycle, prioritisation of long-pending cases, time-bound finalisation of meeting minutes and systematic monitoring of pendency and case ageing.

Efforts have also been made to identify recurring cases for conversion into SION to reduce repetitive approvals.

Line ministries have been requested to nominate additional technical officers to the committees to enhance sectoral expertise and reduce dependence on a limited pool of members.

As part of capacity augmentation, ten additional technical members have been nominated from various ministries, increasing the total number of technical authorities from 12 to 22.

The reforms have resulted in improved outcomes, a release from the ministry said. Between January 2026 and 7 April 2026, a total of 38 NC meetings were held, in which 3,925 cases were taken up and 1,770 cases were disposed of.

Fibre2Fashion News Desk (DS)