The rating agency said the emirate would favour debt financing rather than drawing down investments beyond the established dividend policy of the Abu Dhabi Investment Authority (ADIA), reflecting its ability to access capital markets while preserving financial reserves.
Fitch estimates ADIA’s assets reached $980.7 billion at the end of 2025, providing Abu Dhabi with substantial protection against economic disruption arising from regional hostilities and volatility in international energy markets.
The agency expects Abu Dhabi’s financing requirement, measured as its cumulative deficit excluding estimated ADIA investment income, to remain negative between 2026 and 2028. This indicates that the government is projected to generate sufficient revenue to maintain an underlying financing surplus.
Government debt is forecast to remain around 22 per cent of gross domestic product, considerably below levels recorded by many sovereign borrowers. Fitch expects budget surpluses exceeding 8 per cent of GDP through 2028, supported principally by hydrocarbon revenues.
The projections accompany Fitch’s assessment that Abu Dhabi retains strong financial and external positions despite disruption to shipping through the Strait of Hormuz, a critical passage for Gulf energy exports.
Fitch has maintained Abu Dhabi’s long-term foreign-currency issuer default rating at AA with a stable outlook, reflecting its assessment of the emirate’s capacity to meet financial obligations. The rating is supported by substantial sovereign assets, relatively low government indebtedness and high income levels.
The agency said oil exports had demonstrated resilience despite transportation bottlenecks affecting shipments through the strait. Abu Dhabi’s production facilities had avoided direct Iranian missile strikes, allowing output to recover strongly following a decline in March.
Production has subsequently exceeded 2025 levels, strengthening the government’s revenue outlook and reducing pressure on its finances. Fitch projects hydrocarbon output will increase to approximately 4.3 million barrels daily by 2028, representing an expansion of 1.2 million barrels a day compared with 2025.
Higher production is expected to support economic growth, although the outlook remains sensitive to developments in the conflict and the ability of exporters to maintain reliable transportation routes.
Fitch forecasts Abu Dhabi’s economy will expand by 6.7 per cent during 2026, with hydrocarbons providing the principal contribution. Growth outside the oil sector is expected to remain subdued until the conflict ends, reflecting the consequences of geopolitical uncertainty for commercial activity.
The distinction between oil and non-oil performance is significant for the emirate’s finances. Strong energy revenues can sustain government surpluses even when businesses operating in other sectors encounter weaker demand, disrupted supply chains and higher operating costs.
Fitch’s assessment nevertheless identifies continued geopolitical uncertainty as a risk to the economic outlook. A deterioration in regional security or a substantial decline in oil prices could increase financing requirements, potentially prompting additional debt issuance.
Such borrowing would allow the government to meet expenditure commitments without materially reducing its investment portfolio. The strategy would also preserve assets that contribute to Abu Dhabi’s long-term financial strength through investment returns.
The emirate’s sovereign wealth holdings form a major component of its external financial position. Fitch estimated sovereign net foreign assets at approximately 291 per cent of GDP at the end of 2025, substantially exceeding the median for similarly rated governments.
Separate assessments by Moody’s Ratings and S&P Global Ratings have also emphasised the importance of Abu Dhabi’s financial reserves in supporting its creditworthiness during periods of geopolitical and economic instability.
Fitch expects the wider United Arab Emirates to maintain budget surpluses through 2028, although fiscal conditions differ across the federation’s constituent emirates.
The agency anticipates additional expenditure on alternative logistics routes and measures supporting economic activity, particularly as governments seek to reduce vulnerabilities associated with interruptions to established shipping corridors.
For the federation, government debt is projected to remain close to 24 per cent of GDP between 2026 and 2028, reflecting borrowing by individual emirates and continued federal issuance.
Fitch has maintained the UAE’s sovereign rating at AA-minus with a stable outlook, supported by relatively low consolidated public debt and substantial net external assets.
The agency also expects federal borrowing to contribute to the development of the UAE’s domestic debt market and benchmark yield curve, supporting financing opportunities for other issuers.
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