S&P Global has affirmed its BBB+/A-2 ratings on Sharjah, projecting a two per cent economic expansion through 2022, supported by manufacturing and construction after weak growth in 2018.
The rating agency said that its ratings are supported by Sharjah's relatively diverse economy compared to other sovereigns in the region boasting of a strong fiscal position, despite a low revenue base and the advantages that the emirate derives from being part of the UAE, including low external financing risks and the potential for extraordinary financial support from the Federal Government.
S&P also affirmed a stable outlook on the emirate, adding that the economy is expected to expand steadily between 2019-2022 and that its debt, as well as interest burdens, will remain moderate.
S&P stated that the ongoing expansion of Sharjah's economic free zones, including the heavy industrial free zone at Hamriyah, and the government's planned re-zoning of industrial and residential areas, should support growth.
Additionally, S&P expects Sharjah's fiscal deficits to average around 2.7 per cent of GDP between 2019 and 2022. The Government of Sharjah’s debt burden is also projected to remain moderate as the risk of contingent liabilities arising from government-related entities will remain limited, although public sector debt is increasing.
The Government of Sharjah’s AED 1.1 billion ($300 million) capital injection in state-owned Invest Bank as well as an expected AED 785 million ($213 million) injection later this year is expected to bring the total transaction cost at to around two per cent of 2019 GDP.
Sharjah recently issued $750 million 10-year Sukuk.