Capital Intelligence confirms the sovereign credit rating of the UAE with a stable outlook

Capital Intelligence affirmed the long- and short-term sovereign credit rating of the UAE according to foreign and local currencies at AA- and AA+, respectively, with a stable outlook.

The agency indicated, in a report that Namazon received a copy of, that its ratings reflect the strength of the consolidated internal and external financial balances of the UAE, and it is expected to remain strong over the next 12 months. It also reflects its view that the Emirate of Abu Dhabi is always ready to support federal institutions, in the unlikely event of financial hardship.

Capital Intelligence noted that the UAE's stable domestic political environment, high per capita GDP, as well as the government's ongoing efforts to diversify the economy and improve the consolidated budget structure also support the ratings.

The UAE's foreign accounts remain very strong, supported by Abu Dhabi. The country's current account is expected to record a very high surplus of 12% of GDP for 2023, compared to 14.7% last year. This is mainly due to the Agency's expectations that hydrocarbon prices will remain high for the coming period, in addition to the continued recovery in tourism revenues and non-hydrocarbon exports.

Capital Intelligence pointed out that at an estimate of $142 billion in December 2022, the UAE's official reserves remain moderate, covering about 118% of the external debt due in 2023.

It is estimated that the Abu Dhabi Investment Authority (ADIA), the largest UAE fund, owned about $708 billion in assets under management in 2021, and it is likely that these assets will have increased significantly in 2022. Capital Intelligence expects that the assets of ADIA will reach » About 1.6 times the size of the country's total stock of external debt in 2023.

Capital Intelligence also expected that the economic performance in the UAE will remain strong in the short to medium term, supported by the recovery in the non-oil sectors. Pointing out the possibility of the country's real GDP recording a growth higher than the UAE Central Bank's estimates for the end of last year, which were 7.6%.