Abu Dhabi – Mubasher: Fitch Ratings has affirmed Abu Dhabi's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'AA' with a “ stable” outlook, according to the agency’s statement released late on Monday.
The agency ascribed its rating to the emirate’s strong fiscal and external metrics and high gross domestic product (GDP) per capita, supported by high dependence on hydrocarbons and a relatively underdeveloped economic policy framework.
Moreover, the UAE’s capital and biggest sheikhdom’s sovereign net foreign assets, which acquired over 190% of GDP in 2018, are forecast to be the third-largest among Fitch-rated sovereigns.
Meanwhile, government debt is the second-lowest, acquiring only 7% of GDP, the New York-based rating agency added.
“Higher oil prices are leading to a rapid rebound of revenue and continued increases in government spending,” Fitch said.
The rating agency expects a fiscal surplus of 2.7% of GDP in 2018, against a deficit of 3.5% of GDP in 2017.
“We expect the budget will slip back into a deficit of 3.3% of GDP by 2020, as Brent oil prices fall back to our long-term baseline assumption of an average of USD57.5/bbl and moderate spending growth continues, partly reflecting the three-year AED50 billion (5% of GDP) stimulus package announced by the Crown Prince in June,” the statement highlighted.
Abu Dhabi's fiscal financing requirement is expected to reach $32 billion during the period between 2018 and 2020.
