Fitch Affirms Abu Dhabi at AA, Now Sees a 2026 Budget Surplus of 2.3% of GDP
Fitch affirmed Abu Dhabi at AA with a Stable Outlook and now forecasts a 2026 budget surplus of 2.3% of GDP, excluding the Abu Dhabi Investment Authority’s investment income.
For holders of the emirate’s bonds the rating is unchanged, but the numbers behind it have improved markedly since 1 May, when the agency projected a deficit of 2.2% of GDP on the same measure, the first since 2020. It now expects higher oil revenue to more than offset a largely war-related jump in spending. In The Edge’s reading, the October numbers show the buffers growing through the war rather than merely holding up; what keeps the rating a notch below the agency’s own model score is structure, not the budget.
The affirmation, dated 30 October, covers the long-term issuer default ratings in foreign and local currency at AA, the short-term ratings at F1+ and the senior unsecured debt at AA. The agency said the Stable Outlook reflects the resilience of oil export revenue during the US-Iran war, which is “allowing a continued increase in fiscal and external buffers”.
It grounds the rating in high GDP per capita and very strong fiscal and external metrics. Government debt is among the lowest of the sovereigns it rates, and sovereign net foreign assets among the highest.
The budget forecast turns to surplus as oil revenue outpaces spending
The agency forecasts a surplus of 2.3% of GDP in 2026 excluding investment income from the Abu Dhabi Investment Authority (ADIA), after 2.1% in 2025. On a general government basis, which includes that income, it projects a surplus of 7.1%.
In May the agency had the general government surplus narrowing to 3.0% in 2026, from 6.5% in 2025. On the measure excluding ADIA income, the forecast has swung by 4.5 percentage points, from deficit to surplus.
The surplus is expected to widen in 2027 as oil production rises, then narrow in 2028 as oil prices fall. The agency forecasts Brent to average $70 a barrel in 2027 and $60 in 2028.
For 2026, its 15 October commentary, set out here the next day, kept the average oil price assumption at $87 a barrel. Spending is likely to stay high throughout the forecast period, and the agency expects more spending measures if the authorities choose to bolster confidence or face a further shock.
Abu Dhabi estimates, May against October (% of GDP)
| Measure | May | October |
|---|---|---|
| 2026 balance excluding ADIA income | -2.2 | 2.3 |
| 2026 general government balance | 3.0 | 7.1 |
| Government debt, end-2025 | 19.5 | 19.3 |
| Sovereign net foreign assets, end-2025 | 291 | 300 |
| GRE debt, 2025 | Over 50 | Over 48 |
May figures are from the rating action commentary of 1 May 2026 and October figures from that of 30 October; the 2026 balances are forecasts, the end-2025 and 2025 figures are as the agency printed them. A negative balance is a deficit.
Net foreign assets reach 300% of GDP, 6.7 times the AA median
The agency estimates sovereign net foreign assets, mostly ADIA’s, at 300% of GDP at end-2025. That is 6.7 times the AA median of 45.1%. It is also 9 percentage points above the agency’s May estimate for the same date.
Government debt was 19.3% of GDP at end-2025, against an AA median of 46.5%. The agency expects it to stay around that level, where in May it saw debt rising to 25.3% in 2026 on war-related borrowing.
Issuance is increasingly in local currency, to help develop the domestic debt market. Projected surpluses will go to government-related entities with long-term development mandates and to deposits at local banks.
In the agency’s assessment, contingent liabilities are larger than peers’, because Abu Dhabi is the financial backer of the UAE and funds long-term projects through government-related entities. The agency estimates their debt at over 48% of GDP in 2025, more than double government debt, against over 50% in its May estimate.
It calls those liabilities manageable, given ample fiscal buffers, the entities’ generally profitable nature and asset bases substantially larger than their debt.
Oil output is set to rise to 4.2 million barrels a day in 2027
Annual average oil production is expected to be higher than in 2025. The agency points to the Fujairah pipeline that bypasses the Strait of Hormuz, shipments through the strait and only minor damage to infrastructure.
It projects a jump to 4.2 million barrels a day in 2027, as conditions around the strait normalise and a second Fujairah pipeline opens around mid-year, followed by a further modest rise in 2028. In May it had projected output of 3.3 million barrels a day after the war.
The agency sees upside risks to these forecasts. It cites uncertainty over the UAE’s oil policy after its exit from OPEC, with production capacity at around 5 million barrels a day.
Growth follows the barrels. The agency expects higher capital spending and other counter-cyclical support, backed by resilient consumer spending, to let the non-oil economy grow this year. In its forecast, higher hydrocarbon output lifts total growth to 3.7%. In May the agency had projected a 1% contraction for 2026.
It forecasts that the jump in oil production will take headline growth to 15.1% in 2027, a long-term high. Non-oil growth should rebound over the forecast period on projects funded by government-related entities, it said, though not to the pace of the years just before the war.
Growth, oil and Brent in the October baseline
| Item | 2026 | 2027 | 2028 |
|---|---|---|---|
| Real GDP growth (%) | 3.7 | 15.1 | Not given |
| Oil output (million b/d) | Above 2025 | 4.2 | Higher |
| Brent ($ a barrel) | Not given | 70 | 60 |
Forecasts from the 30 October commentary. The 2026 growth figure is the one the agency gives for “this year”; 2028 oil output is a “further modest rise”. For 2026, the agency’s 15 October commentary kept its average oil price assumption at $87 a barrel.
The model points one notch above the rating
The agency’s sovereign rating model scores Abu Dhabi at AA+. The rating committee took off one notch for the risks from the war, geopolitical risks and the high reliance on hydrocarbons for fiscal and external revenue relative to peers.
The rating is constrained by high dependence on hydrocarbons, a relatively weak but improving economic policy framework, geopolitical risks and governance indicators that are low against peers. For the emirate the agency uses the UAE’s World Bank Governance Indicators, which rank at the 70th percentile.
Separately, the agency withdrew Abu Dhabi’s own Country Ceiling and will no longer keep one for the emirate. The UAE’s ceiling, currently AA+, now applies; because the two were already equal, the ceiling that applies to Abu Dhabi-based issuers does not change.
The agency says banks have been resilient to the war, backed by solid liquidity and capital buffers. In a severe scenario it sees real estate lending as the most likely source of stress, but the flagship banks have limited exposure to corporate real estate and would keep ample liquidity.
The agency said a downgrade could follow a prolonged deterioration in security, including significant damage to energy assets or prolonged disruption of the strait. A substantial erosion of fiscal and external positions, from a sustained fall in oil prices or contingent liabilities materialising, could also trigger one.
An upgrade would need less oil dependence, stronger governance and lower geopolitical risk, with the balance sheets kept strong.
Ratings, forecasts and estimates are from the agency’s rating action commentaries on Abu Dhabi dated 30 October and 1 May 2026, and the 2026 oil price assumption from its 15 October commentary on Gulf sovereigns; differences, ratios and comparisons not attributed to a source are The Edge’s calculations.
Sources: Fitch Ratings, The Edge.
