Despite Qatar’s “resilient” economy and large financial reserves, analysts are taking a closer look at the country’s ability to take on more debt to fund its massive preparations for the 2022 World Cup.

On Friday, Moody’s Investors Service said it was placing Qatar’s government bonds under review for a downgrade, saying the country’s economic strength has declined.

The country is currently rated Aa2, one of the top scores.

If Qatar were to be deemed less creditworthy, it would raise the government’s cost of borrowing money at a time when it’s trying to rein in expenses.

However, another ratings agency, Standard & Poor’s, maintained Qatar’s positive outlook last month.

Qatar is not the only Gulf government in the region to come under critical scrutiny by Moody’s.

Saudi Arabia – which was already rated one rank below Qatar – is also facing a possible downgrade as is Kuwait and the UAE, both of which share Qatar’s high rating.

Meanwhile, Oman’s government debt was knocked down two notches last month. Bahrain has fared even worse and was lowered to junk status.

Moody’s said it has not recorded any of the Gulf states defaulting on any loans in more than three decades.

‘Structural shock’

According to Moody’s, oil and gas sales accounted for more than 80 percent of Qatar’s revenues between 2010-14.

The collapse in oil prices over the last year and a half has caused Qatar to go from running sizeable surpluses to projecting a QR46.5 billion deficit this year.

“The structural shock to the oil market is affecting Qatar’s government balance sheet, and its economy, and therefore also its credit profile,” Moody’s said in a statement.

However, the country has massive financial savings in its sovereign wealth fund, the Qatar Investment Authority. While its lack of transparency means the fund’s exact size is not known, Moody’s estimated that it is worth US$329 billion.

That’s theoretically enough to pay for several years of deficit spending, although Qatar has previously said it plans to borrow money to cover its deficits and leave its savings untouched.

However, Moody’s noted that the government may need to tap the fund to prop up the country’s banks or refinance the debt of Qatar’s state-owned businesses.

Moody’s added that the government decided to reduce petrol subsidies in January and has signaled its intention to cut spending and find new ways of raising revenues.

But with no clear timeline announced, the agency said its rating review is necessary to assess the credibility and sustainability of Qatar’s plans.

Moody’s said it expects to complete its review within two months.

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