Fitch affirms Abu Dhabi's rating with stable outlook

The ratings agency expects a fiscal surplus of 1.9 percent of GDP in 2019 for Abu Dhabi, down from 3.3 percent in 2018

  
Image used for illustrative purpose. Skyscrapers in Abu Dhabi.

Image used for illustrative purpose. Skyscrapers in Abu Dhabi.

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Fitch affirmed Abu Dhabi’s Long-Term Foreign-Currency Issuer Default Rating (IDR) rating at ‘AA’ with a stable outlook.

The rating reflects the emirate’s strong fiscal and external metrics and high GDP per capita, balanced by high dependence on hydrocarbons, an underdeveloped economic policy framework and weak governance indicators relative to 'AA' peers, according to the ratings agency.

Fitch expects a fiscal surplus of 1.9 percent of GDP in 2019 for Abu Dhabi, down from 3.3 percent in 2018, noting that lower oil prices will underpin a 1.6 percent of GDP drop in revenue, despite new revenues from VAT amounting to 1.2 percent of GDP in 2019.

The agency forecasts a budget deficit of 1 percent of GDP in 2020 and 2.3 percent in 2021 with oil prices progressively sliding to $60 a barrel.

Headline spending will contract about 5 percent according to Fitch, while domestic spending will remain stable.

(Reporting by Gerard Aoun, editing by Seban Scaria)

(gerard.aoun@refinitiv.com)

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