
Abu Dhabi has accumulated one of the largest net asset positions to act as a buffer against oil price volatility/Bloomberg
by Kudakwashe MuzoriwaS&P Global has affirmed its ‘AA/A-1+’ sovereign credit ratings on Abu Dhabi with a stable outlook. Abu Dhabi’s strong fiscal buffers, its healthy net asset position—which exceeds 250 per cent of GDP—and proactive policymaking will comfortably cushions the emirate from low oil prices and other external shocks.
The emirate’s economy and public finances depend significantly on oil, however, the government has accumulated one of the largest net asset positions to act as a buffer against oil price volatility.
Furthermore, the government is proactively implementing fiscal reform measures since the oil slump in 2015 that allowed an almost balanced central government budget in 2018 and 2019.
S&P Global stated that these measures cushions Abu Dhabi from the effects of oil price swings on economic growth, government revenues and the external account as well as increasing geopolitical uncertainty in the Gulf region.
The Abu Dhabi Executive Council recently launched an economic stimulus package to fast-track the implementation of key Ghadan 21 economic initiatives to support economic activity, reduce the costs of living, and facilitate business in the emirate.
“We anticipate that authorities will increase capital expenditure, its stimulus programme announced in 2019 (Ghadan 21 initiative) and contributions to the UAE Federal Government to alleviate the economic and social impact of the COVID-19 pandemic,” said S&P Global.
Abu Dhabi’s economic stimulus package includes AED 5 billion water and electricity bills subsidies for citizens, 20 per cent rental rebates for restaurants and tourism-related businesses, and exemptions in registration fees for real estate.
HH Sheikh Mohamed bin Zayed Al Nahyan, the Crown Prince of Abu Dhabi, Deputy Supreme Commander of the UAE Armed Forces affirmed that the newly launched stimulus package in Abu Dhabi and those rolled out by the Central Bank of the UAE provides a solid foundation to accelerate and advance the economy.
The COVID-19 pandemic has forced major economies including the US, China, Japan, the UK and Eurozone to shut their borders as well as launch stimulus packages to shore up their economies. Last week, US President Donald Trump signed the largest stimulus package in the country’s history, a $2 trillion bill intended to rescue the coronavirus-battered economy.
MOST READ
ECONOMY
Oman plans to raise $1 billion to plug its...ECONOMY
UBS launches new private client programECONOMY
Abu Dhabi plans AED 10 billion in PPP tendersECONOMY
GCC oil wealth could be over by 2034 without...ECONOMY
Jordan agrees $1.3 billion IMF programmeECONOMY
Banque du Liban rules out ‘haircut’ on depositsECONOMY
Expo 2020 Dubai to contribute 1.5 per cent to...