Moody's downgrades Sharjah

Moody's Investors Service said it lowered the long-term foreign and local currency issuer ratings and the foreign-currency senior unsecured rating of the government of Sharjah to Baa3 from Baa2 and changed the outlook to negative from stable.

The agency noted the downgrade is driven by Moody's expectation of a sharp deterioration in Sharjah's fiscal strength, as the economic shock brought on by the pandemic continues to have a marked and lasting effect on the emirate's revenue after a severe drop in 2020.

Combined with the expectation government expenditures will continue to grow steadily, in line with the government's strategic social and economic development objectives, material fiscal consolidation is unlikely in the foreseeable future, the agency said.

The outlook captures the risk the government's debt burden and its interest bill will rise more than Moody's currently expects, further restraining Sharjah's capacity to respond to future shocks, the agency said.

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