Fitch Ratings upgraded Ras Al Khaimah’s (RAK) long-term foreign-currency issuer default rating to A+ from A with a stable outlook, it said in a statement. The improved credit score comes on the back of stronger medium-term growth forecasts, as well as higher fiscal buffers due to the introduction of the corporate tax and increased investment inflows as its tourism industry continues to boom.

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More investments + government spending are to thank: The growth forecasts are driven by “the combination of large investment projects and further economic diversification,” the statement said, citing Wynn Resorts’ plans to develop the first integrated gaming resort in the MENA region in the emirate at USD 3.9 bn, with support from state-owned RAK Hospitality Holding and Marjan, as well RAK Central and Beach District developments in January. This is supported by federal government spending, as well as “robust international reserves” due to the peg to the USD.

RAK’s growth will outpace the UAE’s: The ratings agency now sees the emirate growing in the medium term at a 6.2% clip in 2024 and 5% clip in 2025, it said. The construction of Wynn’s gaming resort alone is expected to boost real GDP growth by two percentage points above the UAE's non-oil real GDP growth in both 2024 and 2025, the rating agency said.

Ras Al Khaimah faces the risk of a downgrade if public finances weaken, “for example, due to large, sustained increases in spending or lower state-owned enterprises profits,” Fitch said. Deterioration in macroeconomic growth, potentially triggered by lower non-oil growth in the GCC, could also trigger a lower rating, alongside a further escalation of conflict in the region.

OTHER KEY INDICATORS-

  • Public sector deficits will drop to 2.3% of GDP in 2024 and 2025;
  • Public sector debt will slightly increase to 10.9% of GDP in 2024 and 11.3% in 2025;
  • Deposits will fall to 11.8% of GDP this year and 10.5% in 2025;
  • Revenues will comprise 22.9% of GDP in 2024 and 21.8% in 2025, up from 20% in 2022 and 21.5% in 2023.
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