The UAE federal government achieved a budget surplus of Dh9.75 billion at the end of the second quarter of 2020.
Government revenue by the end of the second quarter exceeded Dh34.7bn, while spending stood at about Dh25bn, state news agency Wam said, citing a Financial Performance Report from the Ministry of Finance.
A surplus of Dh7.95bn was generated during the quarter, following on from Dh1.8bn in the first quarter. Second quarter revenue stood at Dh19.45bn, 56 per cent of which was generated by the Ministry of Finance.
The UAE's federal government has a credit rating of Aa2 and a stable outlook, according to ratings agency Moody's.
"The credit profile of the UAE is supported by the assumed full backing of the government of Abu Dhabi and its strong balance sheet," Moody's said in its annual credit analysis of the federal government in June.
It said the sizeable sovereign assets of the Abu Dhabi Investment Authority supported its credit worthiness, as did the country's "superior infrastructure, very high per capita income and vast hydrocarbon reserves".
Abu Dhabi's Ministry of Finance last week secured strong interest from debt market investors for a $5bn bond issue, which included a two-year note priced at just 0.83 per cent – the lowest rate paid by a Gulf sovereign to borrow money on international debt markets. It also included a 50-year note, which is the longest-dated bond issued by a Gulf sovereign yet. The issue was 4.8-times oversubscribed.
Bonds issued by Gulf sovereigns are in demand from investors, with yields on GCC sovereign debt continuing to fall even as they stabilise elsewhere, a note by economists from National Bank of Kuwait said on Monday.
"GCC sovereign bond yields have trended downwards since April as investors priced in a less risky environment," the note said, adding that credit default swap rates – a form of insurance on bond defaults –have also eased.
"The strong investor demand given the exceptionally low yields of global alternatives, has also helped push down GCC yields," it said.
Bonds and sukuk issued by GCC entities stood at $58bn at the end of June, compared with $62bn in the first half of last year, according to NBK.
