DUBAI: Dubai is signaling a new era of fiscal discipline—and confidence—according to a new report from S&P Global Ratings, which forecasts the emirate is unlikely to borrow significantly over the next two years.
The upbeat projection arrives on the heels of “a significant debt reduction and resilient economic growth over the previous three years,” according to S&P analyst Olivia K. Grant and her team. Much of this stability is attributed to Dubai’s ever-expanding value-added services sector, a key driver in the emirate’s journey toward economic diversification.
Despite the positive debt outlook, Dubai isn’t standing still. The government has unveiled ambitious infrastructure projects, including the AED35 billion ($9.5 billion) expansion of Al Maktoum International Airport, a massive AED30 billion rainwater drainage scheme due by 2033, and the upcoming AED20.6 billion Dubai Metro expansion.
These projects, S&P notes, are set to be financed not by a flood of government bonds but through phased debt, innovative public-private partnerships, and other alternative funding mechanisms. This strategy is designed to minimise the emirate’s exposure to large-scale borrowing.
Debt metrics
S&P’s analysis pegs Dubai’s public sector debt—including liabilities of major government-related entities—at about 64% of GDP for 2025.
Breaking this down, contingent liabilities represent 34% of GDP, and general government debt hovers near 29–30%, factoring in a major loan from Emirates NBD comprising around 10% of GDP. By June 2025, government debt had fallen to AED112.4 billion (about 20% of GDP), after repaying a hefty AED18.8 billion (US$5 billion) in the first half of the year.
The agency expects Dubai’s Debt Management Office to continue its prudent approach, repaying commercial debt as it comes due and rolling over joint facilities provided by Abu Dhabi and the UAE Central Bank. Importantly, general government debt is projected to stabilize, sliding from 32% in 2024 to around 29–30%—a far cry from the 79% peak of 2020 during the pandemic.
Diversification and steady growth
Dubai’s fiscal success is powered by a quietly steadfast economy. S&P projects that real GDP growth will average 2.9% between 2025 and 2028, underlining the emirate’s resilience and diversified base.
In fact, Dubai outperformed other Gulf Cooperation Council members in 2024, growing by 3.2% compared to the regional average of 1.5%. This strength, S&P says, is underscored by Dubai’s ability to maintain expansion even amid persistent regional geopolitical tensions, with an average 3.5% growth from 2007 to 2024.
Inflation, another concern for investors and residents alike, is forecast to remain modest at 2.5–3.0% in the coming years. The peg of the UAE dirham to the US dollar and the government’s administered pricing on essentials help keep costs in check, even as new tariffs emerge.
