Capital Intelligence (CI) has announced that is has affirmed the
The public finances remain sound, supported by prudent fiscal management and the implementation of a small number of fiscal consolidation measures. The consolidated budget position is expected to have posted a large surplus of around 10.1 per cent of GDP in 2013 (13.2 per cent in 2012) and is expected to remain in significant – albeit narrowing – surplus in the short to intermediate term, fortifying the government's balance sheet and further strengthening its capacity to introduce countercyclical measures to absorb economic shocks or manage contingent liabilities.
Consolidated government debt, of which only a small proportion relates to the federal government, continues to decline and is reasonably low at around 12.3 per cent of GDP in 2013 (16.6 per cent in 2012). Public debt is higher at around 60 per cent of GDP and primarily reflects the borrowings of commercially-oriented government related entities (GREs), most of which are not formally guaranteed by Emirati governments. Implicit contingent liabilities stemming from GRE obligations are significant; however, most GREs are currently able to rollover or repay maturing debt obligations.
The consolidated government debt stock is almost fully matched by government deposits in the banking system and is probably dwarfed by public external financial assets. There is limited disclosure of the latter, but it is estimated that the
The country's external finances remain very strong. Preliminary data indicate that the current account surplus exceeded 16 per cent of GDP in 2013, buoyed by a solid pickup in non-hydrocarbon exports. Official foreign exchange reserves of about
Gross external debt is manageable at an estimated 44.1 per cent of GDP or 43.3 per cent of current account receipts (CARs) in 2013. About 92 per cent of the debt stock represents the foreign liabilities of the private sector, especially the
The quality of economic data is relatively weak, although it is slowly improving. Fiscal accounts are neither comprehensive nor, at the consolidated level, compiled in line with international standards. Information on government external financial assets is not disclosed, hindering assessments of balance sheet strength and flexibility.
The banking system is broadly sound with high levels of capitalisation. Although asset quality is improving, the sector's non-performing loans (NPLs) to gross loans ratio remains comparatively high, partly due to the problems of the real estate sectors in the major emirates and the ongoing financial restructuring of loans owed by a few government of
The short-term economic outlook for the
The Outlook for the ratings is 'Stable', meaning that the
The 'Stable' Outlook balances the strength of the government's sound fiscal and external positions against the institutional weaknesses, reliance on hydrocarbon revenues and susceptibility to exogenous shocks, including factors such as protracted periods of subdued oil prices and geopolitical risk.
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