Ras Al Khaimah most transparent in the region: Fitch

September 20, 2010

The emirate of Ras Al Khaimah is the most transparent in the Persian Gulf region providing comprehensive public sector wide budget and debt data while Dubai is at the other extreme with little transparency in government and government-related entities (GREs), according to Fitch Ratings.

Though the data is not released publicly, the ratings agency said it gets data as part of the rating process. Budget data includes all majority-owned public sector enterprises and all their debt is classified as sovereign, whether it is guaranteed or not.
""In the PGCC, the Emirate of Ras Al Khaimah is in the lead here, being the only example of comprehensive public sector wide budget and debt data... Dubai is at the other extreme, with still no public sector-wide budget or debt data available. Abu Dhabi is somewhere in the middle. Its main state-owned enterprises (SOEs) are all rated and as such do prepare accounts and provide debt data. The newly created Debt Management Office in the Department of Finance DoF is also now compiling public sector-wide debt and amortisation data.
However, accounts for SOEs are not consolidated with those of the emirate, despite the close links between the two,"" Fitch analysts Richard Fox, Charles Seville and Purvi Harlalka said in a research note.
Rated ""A""/Stable by Fitch, Ras Al Khaimah's GDP stood at $4.5 billion (Dh16.5 billion) with a per capital income of $18,857. While ""AA""-rated Abu Dhabi's GDP was $149bn with a per capital income of $90,567. RAK economy, according to Fitch, is expected to maintain strong growth this year with real GDP growth averaging 4.3 per cent this year compared to 3.5 per cent last year.
In the Middle East, Fitch rates Abu Dhabi, Bahrain, Kuwait, Libya, Saudi Arabia, Egypt, Morocco, Tunisia, Lebanon and Ras Al Khaimah. It does not rate the UAE, Qatar or Oman.
Fitch Ratings said transparency in the Persian Gulf region is improving, but still falls short in some countries.
Among the Persian Gulf states, ""data quality is particularly weak in the UAE, with for example no official external debt figures published either at the emirate or national level. Balance of payments and national accounts data are also weak and published budget data rudimentary,"" Fitch analysts said in a note.
However, monthly consumer price data have now started to be released and the UAE has recently joined the IMF's General Data Dissemination Standard (GDDS), which confirms its aspiration to further improve data quality and provision, both at the emirate and federal level.
A key data issue for the highly rated oil producers is the size of their SWFs. Saudi Arabia is the most transparent. All its official external assets are held by the central bank - Saudi Arabian Monetary Authority (SAMA) - which publishes a monthly, externally audited balance sheet.
Moreover, movements in published external assets are consistent with balance of payments data (both the balance of payments and asset figures exclude valuation changes, and reported asset levels are therefore conservative). Kuwait does not publish its SWF assets.
Moreover, Kuwait also publishes its investment income in the balance of payments and this can be compared with asset levels as a plausibility check on the SWF figures in the public domain.
As part of transparency measures, Abu Dhabi Investment Authority (ADIA) published its first annual review earlier this year, revealing details of asset composition and average returns for the first time.
However, it did not disclose absolute asset levels, and is only willing to disclose a lower bound figure of 200 per cent of GDP. Fitch regards such a figure as plausible, as they are consistent with data that Abu Dhabi's Department of Finance (DoF) discloses to rating agencies about inflows to and outflows from Adia, including the dividend from state oil company Adnoc, and observable rates of return on the main portfolio segments.