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UAE’s budget to remain in surplus in 2024

The UAE fiscal breakeven oil price will average $64 per barrel from 2024 to 2026, says Fitch Reuters/Essam Al-Sudani
The UAE fiscal breakeven oil price will average $64 per barrel from 2024 to 2026, says Fitch

The consolidated budget of the UAE will remain in surplus in 2024 at 4.1 percent of GDP after reaching 7.8 percent last year, ratings agency Fitch has said.

Abu Dhabi and Dubai will remain in surplus, but deficits will be seen in Ras Al Khaimah and Sharjah.

The Emirates’ consolidated surplus will amount to 3.3 percent of GDP in 2025 and 2.6 percent in 2026.

Narrower deficits in Sharjah and higher production levels in Abu Dhabi will mitigate the gradual drop in oil prices from $80 per barrel in 2024 to $70 per barrel in 2025 and $65 per barrel in 2026.

The UAE rating was affirmed at “AA-” with a “stable” outlook amid a moderate consolidated public debt level, strong net external asset position and high GDP per capita.

However, these strengths are balanced by weak governance indicators relative to rating peers, high dependence on hydrocarbon income and significant leverage of government-related entities.

Fitch expects the UAE fiscal breakeven oil price will average $64 per barrel from 2024 to 2026.

“We expect fiscal policy to remain pro-cyclical, driven by Abu Dhabi, but less so than pre-pandemic and with a greater share of the impulse delivered by state-owned enterprises,” the rating agency said.

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