Contingent liabilities remain a risk to Abu Dhabi's balance sheet but the severe strain seen during the 2008/09 financial crisis will not be repeated, Fitch Ratings has said.
The rating agency said that the support extended this week to property developer Aldar demonstrates that contingent liabilities remain a risk to the UAE capital.
The AED16.8bn ($4.6bn) agreement between Aldar Properties and the Government of Abu Dhabi relates to a package of property sales, transfers and reimbursements between Aldar and the government of Abu Dhabi.
"But the emirate will not be subjected to as severe a strain as in 2008 and 2009, when its strong balance sheet enabled it to deal with such contingencies, despite much lower oil prices than today," Fitch said in a new statement.
IMF stress tests suggest that further solvency support for the emirate's banks will probably not be needed, it added.
Fitch also said it believes that there the amount of further support Dubai might require is limited, as it has better identified its core liabilities and no longer seeks to prop up its entire public sector.
"This is in contrast to 2008-2009, when sharply lower oil prices and negative returns for sovereign wealth funds coincided with capital injections for Abu Dhabi's banks, and to bolster Dubai," Fitch said.
"Abu Dhabi's balance sheet remains exceptionally strong, and at current oil prices foreign asset growth should pick up to over 10 percent," it noted, adding that foreign assets would provide a "substantial cushion to absorb most conceivable economic or oil price shocks".
Fitch rates Abu Dhabi 'AA' with a stable outlook.
"Abu Dhabi has made clear its intention to support its flagship state-owned enterprises (SOEs)," Fitch said, noting that Aldar received the support earlier this week despite being neither wholly state owned nor a majority-owned government-related entity.
The latest deal takes the total size of government assistance this year to AED36bn.