S&P reaffirms Sharjah’s A/A-1 sovereign credit rating

Related Articles

Sharjah approves largest ever budget of Dh29.1 billion

January 19, 2020

Ways to develop contracting sector in Sharjah discussed

January 19, 2020

Sharjah forum to focus on four main trends this year

January 19, 2020

Global credit rating agency Standard & Poor’s has once again affirmed the Emirate of Sharjah’s A/A-1 sovereign credit ratings long- and short-term, foreign and local currency. These ratings were made on the basis of Sharjah’s strong nominal GDP (gross domestic product) growth, despite reports of a slow-down in the UAE’s non-oil business growth. S&P began assigning sovereign credit ratings for the Emirate of Sharjah in 2014.

The confirmation of Sharjah’s sovereign credit rating follows a recent S&P announcement that it has cut Saudi Arabia’s credit rating one notch, revising its previous rating ‘AA-/A-1+’ to ‘A-plus/A-1’, citing the significant rise in its budget deficit. Earlier this year, the agency revised its credit rating outlook for Saudi to a negative one. Meanwhile, the agency reaffirmed its A/A-1 long- and short-term foreign and local currency sovereign credit ratings for the Emirate of Ras Al Khaimah (RAK) with a stable outlook.

Sharjah’s A/A-1 ratings reflect solid economic growth and a low government debt burden, supported by its membership in the UAE, which helps to lower risks. The emirate’s economy is supported by a diverse production base, with real estate and business services accounting for about 20 percent; manufacturing 16 percent; mining, quarrying, and energy 13 percent; and wholesale and retail trade 12 percent.

A wide range of initiatives have been put in place by the Sharjah government to help develop the local economy and has launched a broad range of activities to encourage inward investment and make it easier for investors.

S&P forecasts that Sharjah’s real economic growth will remain robust over 2015-2018, averaging at 3 percent per annum (1.5% in 2015, 2% in 2016, 3.5% in 2017 and 5% in 2018). The rating agency expects that the budget deficit to narrow towards one percent of GDP in 2018, compared with a peak of 2.7 percent of GDP in 2014. The report also noted that the government has managed to reduce the average cost of its debt via refinancing initiatives.

S&P forecasts Sharjah’s nominal GDP at AED 87 billion (US$ 23.7b) in 2015, AED 92 billion (US$ 25b) in 2016, AED 97 billion (US$ 26.4b) in 2017 and AED 104 billion (US$ 28.3) in 2018.

Source: S&P, various