Global credit rating agency Fitch has affirmed Ras Al Khaimah (RAK’s) Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘A’ with a Stable Outlook, continuing the level of rating held by the emirate for 13 consecutive years. The report cited that the rating was supported by the benefits of RAK’s membership of the United Arab Emirates, (UAE, AA-/Stable), its low government debt burden, prudent fiscal management and high GDP per capita.
Contributing to the rating is RAK’s diversified economy and its established manufacturing base, which provides 26 per cent of its GDP, which has allowed for a relatively lighter economic slowdown following the global COVID-19 outbreak. The emirate’s continued fiscal prudence as cited by Fitch has consistently delivered budget surpluses in the face of previous crises.
Ras Al Khaimah’s resilience is further strengthened by its stable political environment and policymaking, backed by strategic plans for sustainable sectoral development. Its integration as part of the UAE has allowed it to focus on its development strategy and build a diversified economy, while its public-sector and government debt/GDP, debt/revenue, and interest/revenue ratios are well below the median for sovereigns in the ‘A’ rating category.
With reference to the outlook for Ras Al Khaimah’s economy, the emirate remains in a strong fiscal position to weather the current global economic conditions resulting from the ongoing COVID-19 pandemic and with the UAE likely to benefit from the predicted rise in oil prices due to higher demand as more people are vaccinated against the virus.
The emirate’s continuous improvement in institutions will also serve to buffer adverse economic effects and the government is working to make it easier for investors to come to RAK, with emirate-wide initiatives that span public and private sectors.
These initiatives will strengthen the emirate’s capacity to withstand global economic downturns moving forwards, and ensure the emirate is best placed to capitalise on growth opportunities in the recovery period.