Sign in
Dubai has a good handle on its government debt, ratings agency S&P’s latest report suggests. The agency expects government debt in the emirate to continue its downward trend, hitting USD 50 bn (c. 34% of GDP) by the end of 2024. That’s a big drop from the c. 70% we saw in 2021, thanks in large part to AED 40 bn in repayments over 2022-2023, which included an AED 20 bn loan from Abu Dhabi and the CBUAE, and AED 7.1 bn in bond issuances.
S&P doesn’t see Dubai needing to tap debt markets for deficit refinancing in the next “couple of years” thanks to projected fiscal surpluses from 2024 through 2027.
Downside risk to that forecast: The report’s authors aren’t factoring in debt finance for the USD 35 bn Al Maktoum International Airport expansion or the USD 8.2 bn Tasreef rainwater drainage project, writing, “it is unclear how it will be distributed between the government and state-owned enterprises and the timing of issuance.”
And on the upside: Dubai has not yet IPO’ed four of the 10 companies it said it would list as part of its asset monetization program, having already taken to market Dewa, Salik, Empower, Parkin, Dubai Taxi, and Tecom. Strong proceeds from those four sales (provided the IPO climate holds up) could help reduce the need to take on fresh debt for the airport and drainage projects.
Looking ahead, S&P sees Dubai’s economy growing at an average clip of 3% annually from 2024-2027, with real estate, hospitality, and financial services sectors leading the charge. GDP per capita is projected to reach USD 38k in 2024, with the expat influx anticipated to push the emirate’s population to 4 mn by 2026.
