Rating agencies Moody’s and Standard & Poor’s (S&P) have granted the emirate of Sharjah its first local and foreign currency rating.

UK-based agency Moody’s gave the emirate’s government a rating of A3 with a stable outlook, while S&P gave a rating of A-1 with a stable outlook.

The ratings reflect Sharjah’s strong government finances, with the emirate recording only small fiscal deficits of 1-2 per cent of GDP on average since 2008.

Government debt is low, standing at approximately 6 per cent of GDP in 2012 and Moody’s states that it expects it to remain under 10 per cent in 2014.

Sharjah’s membership of the UAE also strengthens its financial position with the UAE’s ministry of finance providing much of the funding for public services such as education and healthcare for nationals from its own budget.

“We also believe that under certain circumstances, Sharjah would receive extraordinary financial support from the UAE, although we do not anticipate that the need will arise,” read a statement from S&P.

Risks to the emirate’s outlook include geopolitical risks such as regional tensions with Iran and the potential disruption of shipping lanes which pass through the nearby Straits of Hormuz.

Limited availability of timely economic data also constrains the rating.

Sharjah has a limited hydrocarbon reserves with oil exports playing a small role in its economy. The emirate compensates for this weakness by being a more affordable place to conduct business than Dubai or Abu Dhabi.