Today's Edition
MAYS IBRAHIM (ABU DHABI)
Capital Intelligence Ratings (CI Ratings) has affirmed the UAE’s Long-Term Foreign Currency and Local Currency Ratings at ‘AA-’, while maintaining its Short-Term Foreign Currency and Local Currency Ratings at ‘A1+’.
This reflects the UAE’s strong consolidated fiscal and external positions, largely supported by Abu Dhabi and a stable domestic political environment.
“The UAE’s stable domestic political environment, very high GDP per capita, sound banking system, and the government’s ongoing efforts to diversify the economy and improve the consolidated budget structure also support the ratings,” CI Ratings said.
The agency also noted that Abu Dhabi would likely provide financial support to federal institutions in the unlikely event of financial distress.
The UAE’s external accounts remain very strong, with a current account surplus that — although narrowed to 9.1% of GDP in 2024 from 10.7% in 2023 — is expected to average 6.5% of GDP between 2025 and 2027.
The report said that this is based on the expectation that hydrocarbon exports will gradually recover while non-oil exports continue to perform well.
The country’s official reserves are adequate, rising to $258.5 billion in March 2025 from $238.2 billion in December 2024, with the latter covering 186.1% of external debt falling due this year.
The UAE’s sovereign wealth funds hold far larger assets, according to the report. It’s estimated that the Abu Dhabi Investment Authority alone had around $1.1 trillion of assets in 2024.
While the UAE’s net external creditor position cannot be taken as a solvency risk indicator for the individual emirates, CI Ratings expects Abu Dhabi to provide financial assistance to the federal government if needed, the report said.
Public finances remain very strong, buoyed by high hydrocarbon revenues. The consolidated budget surplus is expected to average 4% of GDP in 2026-27, assuming an average oil price of $60 per barrel and robust non-hydrocarbon income.
The government’s debt burden is expected to decline slightly to 32.1% of GDP in 2024 from 32.4% in 2023.
Refinancing risks are low given the budget surplus and strong access to capital markets, with Dubai and Abu Dhabi successfully raising funds despite regional tensions.
“Economic performance is expected to remain upbeat in the short to medium term, supported by strong domestic activity and reform implementation under the UAE Strategy for the Future,” the report added.
Real GDP is projected to expand by an average of 4.8% between 2025 and 2027, driven by non-hydrocarbon sectors and a recovery in the oil sector as OPEC+ production cuts are gradually phased out in 2025.
The banking system, which is a supporting rating factor, continues to be sound, with well-capitalised banks and improving asset quality.
The report showed that banks in the UAE have a capital adequacy ratio of 17.6%, with Tier 1 and CET1 ratios at 16.2% and 14.7%, respectively, as of March 2025. The average non-performing loan ratio declined to 3.8% at end-March 2025 from 5% at end-March 2024.
