Emirates: International credit rating agency Moody’s on Tuesday affirmed the Aa2 long-term local and foreign currency issuer ratings of the UAE’s government with the outlook predicted to remain stable.

Moody’s Investors Service also affirmed the foreign currency senior unsecured debt and program ratings at Aa2 and (P) Aa2, respectively.

As per the report, the UAE federal government’s debt level are likely to remain very low, “supported by its adherence to balanced budget targets and limited spending needs due to the scale of fiscal decentralization within the country.”

Despite being exposed to “longer-term carbon transition risks” and “regional geopolitical tensions,” the rating agency said solid institutions and policymaking helped contain these challenges.

The stable outlook reflects Moody’s expectation that continued efforts by the governments across the UAE to expand non-hydrocarbon revenue, promote the development of non-hydrocarbon sectors and attract foreign businesses and talent may reduce the federal government’s indirect exposure to oil price cycles and a potential acceleration in global carbon transition over the medium term, further strengthening its credit profile.

However, uncertain global geopolitical developments and downside risks to global growth may slow the diversification momentum, while tangible impact of the government's initiatives and policies are likely to take time to materialize, the report added.

The UAE’s local and foreign currency country ceilings remain unchanged at Aaa.