UAE's debt-to-GDP ratio drops, says IIF report

Dubai - Public debt, including of government-related entities, will continue to decline to more sustainable levels

The UAE's overall debt-to-GDP ratio has dropped by 7.1 percentage points with all four sectors - household, non-financial corporates, government, and financial sector - reducing debt, according to a report from the International Institute of Finance (IIF).
Debt held by UAE households as percentage of GDP fell from 24.3 per cent in the third quarter 2017 to 21.9 per cent in the fourth quarter of 2018, while the government's debt fell from 19.9 per cent to 18.3 per cent.
Similarly, financial sector total debt as a percentage of GDP fell from 43.4 per cent to 42.1 per cent while non-financial corporate debt dropped from 88.2 per cent to 86.4 per cent. The IIF had forecast that the UAE's nominal GDP grew from $383 billion in 2017 to $436 billion in 2018 and $459 billion in 2019.
It had said in a November report that the UAE's public debt as a percentage of GDP has been on the decline since 2016. It has dropped from 62 per cent from 2016 to 48 per cent in 2019.
"Public debt, including of government-related entities, will continue to decline to more sustainable levels," Garbis Iradian, chief economist for the Mena at the IIF said, adding that the UAE can afford a modest expansionary fiscal stance in the next few years given the large financial buffers and relatively low government debt.
Globally, debt has grown by over 12 per cent - or $27 trillion - since 2016, reaching $244 trillion (318 per cent of GDP) in the third quarter of 2018.Household debt in emerging markets topped $12 trillion in the same period, up from $9.3 trillion in 2016. While corporate sector accounted for over a third of the rise, putting debt/GDP at a record high of 92 per cent of GDP.
- waheedabbas@khaleejtimes.com