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S&P Global Ratings affirmed its ‘BBB+/A-2’ long- and short-term foreign and local currency sovereign credit ratings for the Emirate of Sharjah, with a stable outlook.
Sharjah’s economy is expected to expand steadily by about 2 percent from 2019 to 2022, with moderate debt and interest burdens, S&P said in its research report.
S&P could raise the emirate’s rating in the next two years if net general government debt or debt-service costs decreased materially, however views this as unlikely over the next two years.
“We could lower our ratings in the next two years if wider budget deficits than anticipated accelerated the increase in the government's debt or interest costs. The ratings could also come under pressure if economic growth were significantly weaker than our base-case projections,” the ratings agency said.
According to S&P, Sharjah’s ratings are supported by its relatively strong fiscal position, despite a low revenue base, and the advantages that Sharjah derives from being part of the UAE, including low external financing risks and the potential for extraordinary financial support from the UAE.
“In our view, the emirate's economy is relatively diverse compared with those of other sovereigns in the region,” S&P noted.
(Reporting by Gerard Aoun, editing by Seban Scaria)
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