Mubasher: Sharjah's credit profile (A3) is supported by the United Arab Emirates and low but rising debt burden, Moody's Investors Service said in a report on Tuesday.
“The stable outlook on Sharjah's rating reflects a balance of upward and downward credit pressures,” the report stated.
“The outlook also reflects our expectation that new government revenue-raising measures will lead to a stabilisation in the debt burden.
Sharjah's moderate economic strength reflects its strong growth dynamics, high GDP per capita and strong competitiveness, balanced against the economy's relatively small nominal size.” The report added.
Real gross domestic product (GDP) growth is forecast to stand at 2.7% in 2018 and 2.9% in 2019, supported by an increase in capital expenditure, higher oil prices in 2018 and a gradual acceleration in Dubai's economy.
The ratings agency noted that the key credit challenges include the rise in government debt since the rating was assigned in 2014 and limited policy and data transparency.
The narrow government revenue base is also a credit weakness, while the small size of Sharjah's economy and close linkages with the rest of the UAE, particularly Dubai, expose the emirate to fluctuations in regional demand, according to Moody’s.
