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Moody’s reaffirms Sharjah’s A3 rating

Moody’s Investors Services, has reconfirmed the Emirate of Sharjah’s strong “A3” long-term credit rating with a stable outlook. The international credit rating agency issued its first credit report on Sharjah in January 2014 an awarded an A3 stable rating reflecting the emirate’s credit strength, supported by its strong fiscal policy and low government debt position.

Moody’s published a separate report on Sharjah’s 2015 budget on 5 February 2015 highlighting the emirate’s credit-positive fiscal trend. The agency reports that “the 2014 figures show a lower-than-budgeted cash deficit for the year” and that the 2015 budget reflects “a stabilisation in the deficit, a credit-positive trend”.

The Moody’s report also notes the diversity of Sharjah’s economy as a strength in the face of falling oil prices. According to the report “Sharjah has a relatively small oil and gas sector which contributes 13% to GDP and 14% to total revenue, much less than that of regional peers”, and “the government plans increased land sales in 2015 (compared to the 2014 outturn) and to implement other revenue-enhancing measures.”

Moody’s Investors Service assigned a rating of A3 to the Sharjah government’s US$750 million (AED 275b) US dollar sovereign Islamic bond issued in September. According to banking sources, demand for the bond outstripped its value by nearly 10 times, demonstrating a high level of confidence among investors in Sharjah’s economy and in the government’s fiscal policy.

The government of Sharjah set a record annual budget for the year 2015 of AED 17.7 billion (US$ 4.8 b), 12 percent above Sharjah’s AED 15.4 billion (US$ 4.2 b) 2014 budget. No single sector of Sharjah’s diversified economy contributes more than 20 percent of its GDP and the government has earmarked 45 percent of 2015 expenditure to economic development.

Source: Moody’s, Sharjah Finance Department

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