DUBAI: Moody’s Investors Service maintained the UAE’s Aa2 long-term issuer rating, the agency’s third-highest, due to the rapid reaction of the country’s various institutions in rolling out a slew of measures to counter the Covid-19 pandemic, which it said did not materially affect the Arab world’s second biggest economy.
The UAE’s fiscal strength remains robust, the ratings agency said as it maintained its stable outlook, report agencies.“The rating affirmation is supported by the relatively muted impact of the pandemic on the federal government’s fiscal strength, in part the result of an effective government policy response to the pandemic,” Moody’s said in a statement.
“World leading progress on vaccinations should support the economic recovery, limiting the impact of the pandemic on the UAE’s credit metrics.”
The UAE rolled out its mass Covid-19 inoculation programme last year and has so far administered 10.7 million vaccine doses – which represents a rate of 108.99 doses per 100 people, among the fastest in the world. With aggressive testing and the quick vaccination drive, the UAE has managed to bring Covid-19 cases down in the second wave, as opposed to parts of Europe, the Americas and India, where infection rates have recently risen.
The UAE’s progress in vaccinating its population could allow for an easing of inbound international travel, supporting a “faster-than-expected recovery in the tourism sector, and providing a boost to the hospitality and retail sectors”, Moody’s said.
The UAE was among the first countries in the region to roll out stimulus measures to soften the impact of the pandemic on its economy, support small and medium-sized enterprises and protect the livelihoods of individuals.
Fiscal and monetary measures remain in place for continued economic recovery. Last month, the UAE Central Bank extended parts of its Targeted Economic Support Scheme, a zero-cost loan initiative aimed at boosting liquidity in the banking system – until the end of June 2022. Overall, the UAE has unveiled economic support packages worth at least Dh388bn since the onset of the pandemic.The impact of the federal government’s stimulus measures on its finances was modest, at just over 1 per cent of the country’s gross domestic product. The federal government’s fiscal deficit was just 0.2 per cent of GDP in 2020, which was funded from existing cash balances, the agency said.
“The broader policy response to the pandemic has demonstrated the UAE’s capacity to respond to shocks,” Moody’s said.