S&P trims Ras Al Khaimah

S&P said it lowered its long-term foreign and local currency sovereign credit ratings on the Emirate of Ras Al Khaimah to A- from A.

“The downgrade reflects our view that risks to RAK’s economic position relative to peers have increased. We forecast a 5% contraction of the real economy in 2020, exacerbating already-weak per capita growth. A modest recovery amid relatively weak domestic and external demand, softened by the pandemic and relatively low oil prices, will result in 2020-2023 growth being lower than the 2014-2019 average of 2.7%. This will reduce wealth levels and, consequently, debt-bearing capacity,” S&P said in a press release.

“Despite risks to RAK’s fiscal position, we note its track record of fiscal prudence and commitment to preserving a fiscal surplus, which we forecast the government will maintain through proactive policymaking. While it lacks fiscal flexibility on the revenue side, it does have flexibility on the expenditure side,” the agency said.

The outlook is stable.

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