58900
The emirate’s hydrocarbon revenues have the potential  to exceed forecasts.
The emirate’s hydrocarbon revenues have the potential  to exceed forecasts.

Fitch: Abu Dhabi to Face 5.9% GDP Deficit

Fitch: Abu Dhabi to Face 5.9% GDP Deficit

The pace of fiscal adjustment in Abu Dhabi is forecast to slow in 2017, after large spending cuts in 2015-2016, according to Fitch Ratings.
The ratings agency said in a research note that it expects a government deficit of 5.9% of GDP in 2017, based on Brent crude averaging $45 per barrel, nearly unchanged from 2016, Arabian Business reported.
In affirming Abu Dhabi’s long-term foreign and local currency issuer default ratings at ‘AA’ with a stable outlook, Fitch said that Abu Dhabi’s total spending could edge up by 3% in 2017, having contracted by 10.3% in 2016 and 18.1% in 2015.
Spending in 2016 is estimated to have been above budget. Non-oil revenue targets have been scaled back and will now be met largely by dividends from state-owned and government-related enterprises, it added.
Fitch said the emirate’s hydrocarbon revenues have the potential to exceed forecasts, reducing the urgency for new policy measures.
“In 2018, we expect the government budget to post a surplus of 1.5% of GDP, as Brent recovers to $55/barrel and the introduction of VAT yields around 0.5% of GDP,” the statement said.
“New taxes on hotel stays and rents paid by non-nationals were introduced in 2016 but the fiscal effect of these will be small. Earlier liberalization of fuel prices and hikes to utility prices should help rein in the subsidy as oil prices recover,” it added.
Fitch said it estimates that non-hydrocarbon growth slowed to around 3.5% in 2016 from 7.6% in 2015, reflecting lower public sector demand, weak economic sentiment, tighter banking sector liquidity and effective exchange rate appreciation.
The agency expects non-oil growth to pick up to 4% in 2017 and 4.5% in 2018 as consolidation eases and oil prices recover.
In its forecast, the government faces a fiscal financing need of 11.8% of GDP in 2017 and 4.6% of GDP in 2018—assuming that the government finances the deficit excluding income from Abu Dhabi Investment Authority.
ADIA’s assets are not officially disclosed, but Fitch estimates that strong returns helped propel their value to $639 billion in 2016, from $627 billion in 2015. Fitch expects the value of ADIA assets to be little changed by end-2018 as investment returns would offset draw-downs for financing.

Short URL : https://goo.gl/eU6cZT
  1. https://goo.gl/6jS0xl
  • https://goo.gl/3TCGpf
  • https://goo.gl/Vsj9kJ
  • https://goo.gl/YvJHDw
  • https://goo.gl/xIwiYt

You can also read ...

China Challenges US Solar Panel Duties
China says it is challenging a US tariff hike on solar panels...
In a retaliatory move, President Recep Tayyip Erdogan’s government on Wednesday announced higher tariffs on some US imports, namely on passenger cars (120%) and leaf tobacco (60%).
Turkey has raised tariffs on some US imports, including...
World trade volume growth peaked in January at almost 5.7% year-on-year but nearly halved to less than 3% by May.
Cyclical indicators point to slower and more uneven growth in...
File picture of Kim Jong-un (L) and Moon Jae-in at the truce village  of Panmunjom, South Korea.
South Korea President Moon Jae-in on Wednesday offered a bold...
Surging Inflation Mars Philippines Growth
The Philippine economy in 2018 is a story that can be summed...
Moody’s Predicts Slower Fiscal Progress in S. Africa
South Africa’s fiscal consolidation will be slower than the...
Nigeria CPI Drops to 11.14 Percent
Nigeria’s National Bureau of Statistics says the consumer...
Transport tickets and fuel have driven up costs for consumers.
Inflation in the UK climbed in the month of the July, as had...

Add new comment

Read our comment policy before posting your viewpoints

Trending

Googleplus