Today's Edition
A. SREENIVASA REDDY (ABU DHABI)
S&P Global Ratings affirmed its ‘A/A-1’ long- and short-term foreign and local currency sovereign credit ratings on the emirate of Ras Al Khaimah. It also affirmed the outlook as stable.
S&P Global Ratings’ ‘A’ long-term rating for foreign and local currency borrowings indicates strong capacity to meet financial commitments, although it is somewhat more susceptible to adverse economic conditions than higher-rated sovereigns in the ‘AA’ or ‘AAA’ categories. The rating remains within the investment-grade category, reflecting the emirate’s sound credit profile and stable fiscal outlook.
For short-term borrowings, Ras Al Khaimah holds an ‘A-1’ rating, which indicates a strong capacity to meet short-term financial obligations. On S&P’s short-term scale, the highest level is A-1+, followed by A-1, A-2 and A-3.
S&P Global Ratings also maintained an ‘AA+’ transfer and convertibility assessment on Ras Al Khaimah. This assessment reflects the agency’s view of the risk that authorities could restrict the conversion of local currency into foreign currency or limit the transfer of funds abroad.
An AA+ assessment indicates that the risk of such restrictions is extremely low and just one notch below the highest level of ‘AAA’.
The rating agency said the stable outlook reflects its expectation that Ras Al Khaimah’s prudent fiscal management and fiscal buffers will provide sufficient policy space to deal with adverse geopolitical developments or a weaker growth outlook.
However, S&P lowered its growth forecast for 2026 to 2.0% from an earlier estimate of 3.6%, citing the potential economic impact of escalating geopolitical tensions in the region. Manufacturing, construction, trade and real estate — sectors that together account for about 60% of Ras Al Khaimah’s real GDP — remain vulnerable to shifts in market sentiment. Prolonged disruptions to shipping routes could also reduce demand for some of the emirate’s mining exports.
The agency estimates that Ras Al Khaimah’s real GDP expanded by about 4.3% in 2025 and expects growth to moderate to an average of about 2.2% during 2026-2027 before strengthening again to around 3.5% in 2028-2029, supported by tourism and infrastructure investments.
Nominal GDP is estimated to have risen to Dh49.4 billion ($13.5 billion) in 2025 and is projected to increase further to about Dh50.8 billion in 2026 and Dh52.5 billion in 2027, according to the data presented in the report. GDP per capita stood at about $32,300 in 2025.
Tourism development remains a major driver of the emirate’s medium-term growth prospects.
The largest project in the sector is the Wynn Al Marjan Island integrated resort, whose total cost amounts to about 42% of RAK’s GDP. The project is being developed through a joint venture between Wynn Resorts, which holds a 40% stake, and government-owned Marjan LLC with a 60% stake. The resort is scheduled to open in early 2027.
S&P noted that several additional hotels are also under construction by private developers and expected to open over the next two to three years. Authorities plan to broaden tourism offerings and target a wider visitor market to mitigate potential risks of overcapacity. The Marjan Island area has already recorded strong growth in primary residential property prices in the past two years.
On the fiscal side, S&P expects the government to maintain a conservative fiscal stance and run surpluses averaging about 3% of GDP during 2026-2029. The emirate recorded strong revenue of about Dh7.8 billion ($2.1 billion) in 2025, equivalent to 6.2% of GDP, exceeding the budget estimate of Dh6.2 billion. The stronger outcome was supported by stable dividends from state-owned enterprises such as RAK Ports and Marjan, as well as solid non-tax revenue from VAT, customs, tolls, fees and fines.
Government expenditure is expected to rise in the coming years due to higher capital spending, with total spending projected to average 12.7% of GDP in 2026-2029 compared with about 9% in 2025. Fiscal surpluses are likely to be supported by corporate tax revenue, gaming-related taxes, hospitality-sector income from 2027 and dividend payouts from Marjan starting in 2028.
Despite rising development spending, RAK’s balance sheet remains strong. Government debt was relatively low at about 7.4% of GDP in 2025 after refinancing a $1 billion sukuk in March that year. Liquid assets are expected to average 30-35% of GDP during 2025-2028, more than offsetting government debt.
S&P added that the emirate’s strong net asset position partly offsets fiscal risks stemming from contingent liabilities linked to government-related entities and development projects. Total contingent liabilities amounted to about 16% of GDP in 2025, including project-related debt raised through state-owned enterprises.
The rating agency also noted that RAK benefits from being part of the UAE federation, which reduces its funding requirements and provides potential extraordinary financial support if needed.
Inflation in the emirate is expected to remain contained at around 1% during 2026-2029, up slightly from about 0.5% in 2025, reflecting stable housing and energy costs.
