Abu Dhabi’s strong fiscal surpluses, substantial sovereign assets, and low debt levels have all contributed to Fitch’s affirmation of the emirate’s long-term foreign-currency rating at “AA” with a stable outlook.
Although Abu Dhabi’s fiscal situation is strong, the US-based rating agency pointed out that there are still issues to be addressed, including the country’s reliance on hydrocarbon revenues, its still-developing policy framework, and governance metrics that fall short of some of its peers.
The UAE’s strong fiscal and external positions were cited by S&P Global in its recent assignment of a “AA/A‑1+” with a stable outlook for its foreign and local currency sovereign credit ratings. Additionally, the agency pointed out that the UAE’s substantial asset base would protect it from fluctuations in the price of oil and regional geopolitical unrest.
Abu Dhabi’s fiscal position remains among the strongest of sovereigns with a Fitch rating, despite these structural constraints. Government debt, which was 17% of GDP at the end of 2024, much lower than the peer median of 48%, is predicted to increase only slightly to 18% by 2026 as a result of local currency issuance intended to support the growth of the domestic debt market.
“We project a budget surplus of 7.0% of GDP in 2025 (3.1% excluding investment income) based on Fitch’s oil price (Brent USD65/b) and production (3.2m b/d) forecasts, along with some spending under-execution, down from 9.9% in 2024,” Fitch stated in its latest report, as reported by Arab News.
“For 2026, higher oil production, modest spending growth, and the start of corporate income tax receipts will widen the surplus to 8% (4.3% excluding investment income),” it added.
The report highlighted the emirate’s resilience to changes in the oil market by estimating that Abu Dhabi’s fiscal breakeven oil price in 2025 will be $42.60 per barrel, or $54.30 excluding investment income. By modifying expenditures or using dividends from Abu Dhabi National Oil Co., the government can preserve economic stability in the event that oil prices fall.
By the end of 2024, sovereign net foreign assets are expected to have grown to 255% of GDP, according to Fitch, with a significant portion of surpluses directed to government-affiliated companies like Abu Dhabi Developmental Holding Co. and Mubadala. Additionally, MGX, a joint venture specialising in investments in artificial intelligence, is anticipated to receive some funding.