S&P Global Ratings affirmed Sharjah’s long- and short-term foreign- and local-currency sovereign credit rating at BBB/A-3 with a stable outlook yesterday, the ratings agency said in a press release. The emirate’s transfer and convertibility assessment — S&P’s view on the likelihood that a non-sovereign entity could face restricted access to FX, to ensure the sovereign has the ability to meet debt requirements — was also maintained at AA+.

THE RATIONALE-

Fiscal performance looks set to improve: The rating is supported by S&P’s “view that Sharjah’s government will introduce sufficient measures to begin stabilizing” its debt-to-GDP ratio in the next two years, according to the press release. Sharjah’s total debt-to-GDP ratio stands at an estimated 52.5%, S&P says, expecting that this figure will inch up to 54.0% in 2025 and 55.7% in 2026. Sharjah’s rating could be revised upwards if its “fiscal performance materially strengthened, putting net general government debt on a downward path.”

And economic growth is on the horizon: “We also expect the UAE’s favorable macroeconomic fundamentals, on the back of buoyant oil and non-oil activity, to support economic growth in Sharjah and the government’s fiscal objectives,” S&P says. The emirate also has a more diversified economy than other sovereigns in the GCC, with S&P seeing growth in Sharjah’s five biggest sectors — construction, wholesale and retail trade, real estate activities, manufacturing, and financial services.

The ratings agency sees the emirate’s GDP growing at a 2.5% clip in 2024 and a 2.0% clip in each of 2025 and 2026, while GDP per capita will grow between 1.0-1.5% through 2026.

Tags: