Sharjah's government has recently boosted budget spending to $4.82 billion in a bid to stimulate economic growth. Can you tell us more about the way in which the budget increase will achieve this?
The budget for the Emirate of Sharjah, which is set under the guidance of HH Sheikh Dr. Sultan bin Muhammad Al Qasimi, UAE Supreme Council Member and Ruler of Sharjah is mainly geared towards education, culture, infrastructure, health, and free housing for local families. Though our budget has rapidly grown in recent years, it is still a relatively small budget. The reason for this is that His Highness wants Sharjah to grow organically and sustainably, instead of exponentially, which could have a negative impact in the future. This strategy was part of the reason Sharjah was not affected as much by the 2008 crisis, which only had a minimal effect. As a result, the government currently has a low debt burden, and enjoys a stable fiscal position. We leave commercial ventures to the public and investors, as our focus is on building the country and its infrastructure through investments that we are undertaking gradually.
Sharjah has received an “A3” long-term credit rating from Moody's, and an A rating from Standard and Poor's. What is your assessment of the Emirate's fiscal position, and how pivotal are these ratings in positioning Sharjah as a preferred destination for foreign investment?
Sharjah received those ratings for the first time in 2014, after two years of hard work from our department and other stakeholders. The ratings were vital for our position on the capital markets. Since our aim as the government of Sharjah was to issue Islamic bonds, we needed to be in the possession of a sovereign credit rating. As our economy is small compared to other economies, it has been very helpful for a lot of things. Investment inflow has significantly grown, as investor confidence has increased and they know Sharjah is a safe place to invest. Our local banks are benefiting from the rating, because it reflects positively on them for the sake of their own credit ratings. Also, our rating contributes to the overall economic rating of the UAE. The rating has also strengthened us on the borrowing market, where interest has gone down for us. As I mentioned before, we wanted this rating to be able to issue Islamic bonds, sukuk, which we did in September 2014, when we issued a 10-year, $750 million sukuk, which was the Emirate's debut debt issue on capital markets, and has been a huge success. The sukuk will make Sharjah more stable, and will allow us to concentrate on other issues. We have already received inquiries for a new one. This, however, will not happen anytime soon, as we abide by our principles of sustainability.
Sharjah's well-diversified economy has recorded strong GDP growth from 2001 to 2014, with no sector representing more than 20% of GDP. How do you view the future growth path of Sharjah's economy?
Sharjah was affected by the crisis, but because of the structure of the economy, the only sector that was really hit was real estate. The impact there was mitigated, however, because the number of construction projects was not that high. Looking to the future, Sharjah is still moving forward and growing steadily. His Highness is focusing on educating the local people that will in the future make up the workforce of Sharjah. His emphasis on education is what will put Sharjah firmly in place to continue to enjoy growth in the future.
What are your department's expectations for the coming year?
We are positive, and we have always been positive. HH Sheikh Dr. Sultan bin Muhammad Al Qasimi always tells us to look on the bright side. We are managing our budgets under his guidance, we can see his vision, and we are managing our income and expenditure in Sharjah and I am confident in the team at the Finance Department, which is doing a great job. The future is bright, not only in Sharjah, but across the Emirates. A lot of people are anxious about future economic stability, but we have been safe here and growing, and we have a lot of expatriates, who come and live here, and they love living here and we are happy to have them, as we have a very welcoming country.