Rating agency Fitch has affirmed Abu Dhabi’s long-term foreign and local currency issuer default rating (IDR) at AA with a stable outlook.

The main drivers for the strong rating is the emirate’s external sovereign balance sheet, with sovereign net foreign assets estimated to have increased to 178 per cent of GDP at the end of 2013, from 151 per cent the previous year. This is enough to fund five years of government spending.

External government debt has also fallen due to the repayment of a eurobond in early 2014.

Debt of government-related enterprises and state-owned enterprises fell to 35.4 per cent of GDP in 2013. Fitch says the ability of Abu Dhabi to support these entities is “not in question”.

Real GDP growth stood at 5.2 per cent in 2013, with non-oil growth at 7.4 per cent, the fastest level seen in seven years. The development of the non-oil economy is essential for the diversification of the emirate’s economy.

The emirate’s banking sector continues to perform well, growing in line with the wider economy. The non-performing loans of Abu Dhabi banks have declined to a five-year low. Capital adequacy is high, at 17.8 per cent at the end of March this year.

The rising residential real estate prices are unlikely to throw the growth of the banking sector off-course, says Fitch. The agency says that compared with the 2008 property boom, the current increase in prices are not as reliant on bank lending.