Fitch Ratings, the American credit rating agency has affirmed an ‘A’ rating affirmed Ras Al Khaimah’s (RAK) Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘A’ with a Stable Outlook.
The ratings are supported by the benefits of RAK’s membership of the UAE, a low government debt burden and high GDP per capita.
The positive Long-Term Foreign-Currency Issuer Default Rating, IDR, is driven by several factors, chief among them being the emirate’s low government debt burden and high GDP per capita, Ras Al Khaimah Investment and Development Office, IDO, said in a statement.
“The affirmation reflects our expectation that the pandemic shock will not have a lasting impact on RAK’s fiscal position, which has significantly improved over the past five years”, commented Fitch. It appended that the economy may contract by 6.4% in 2020 due to the global recession and that the economy is likely to rebound by 5.5% in 2021 but the GDP will not able to match the 2019 end level.
The rating affirmation, IDO says reflects the stability of Ras Al Khaimah’s economy and the sound policies implemented by the government and the leadership. “This, in turn, creates an encouraging and promising environment for current and prospective investors and enterprises in Ras Al Khaimah, as the emirate continues to build on its strengths, develop its vital sectors, and strengthen relations with international bodies,” the organization stated.
The Government of Ras Al Khaimah has long been committed to a policy of fiscal prudence, which has allowed the debt-to-GDP ratio to maintain a consistent downward trend. “This approach has proven its value over the past decade, with RAK authorities continuously working to improve data collection, budgeting, and financial planning and control, to enhance efficiency in utilizing fiscal resources,” RAK IDO concluded.