According to a new S&P report, Dubai is not expected to issue significant new debt over the next two years because the emirate anticipates fiscal surpluses between 2025 and 2028. This positive outlook is a result of substantial debt reduction and robust economic growth achieved over the past three years, particularly driven by the expanding value-added services sector.
Debt Management and Infrastructure Financing
Despite the healthy fiscal position, Dubai has announced several major infrastructure projects that will require financing, including:
The AED35 billion ($9.5 billion) expansion of Al Maktoum International Airport.
The AED30 billion Tasreef rainwater drainage project.
The AED20.6 billion Dubai Metro expansion.
S&P expects the Dubai Debt Management Office to utilize public-private partnerships (PPPs) and other alternative financing mechanisms to fund these initiatives, minimizing the need for large-scale conventional debt issuance.
As for the existing debt, S&P projects that Dubai’s total public sector debt (which includes the government and government-related entities) will remain around 64% of GDP in 2025. The report also forecasts that the gross general government debt will stabilize, decreasing from 32% in 2024 and significantly down from its peak of 79% in 2020. The government has already demonstrated its commitment to reducing debt by repaying approximately AED18.8 billion in the first half of this year. S&P assumes the government will continue to repay commercial debt but will likely roll over the remaining joint facilities provided by Abu Dhabi and the UAE Central Bank.
Economic Outlook and Diversification Benefits
Dubai’s highly diversified economy is expected to keep its momentum strong, with real GDP growth projected to average 2.9% between 2025 and 2028. The emirate’s economic resilience is notable, having expanded by an average of 3.5% annually over the 2007-2024 period, despite regional geopolitical tensions. The report highlights that Dubai has even outperformed other GCC countries, expanding by 3.2% in 2024 compared to the region’s average of 1.5%.
Furthermore, consumer price inflation is anticipated to remain modest at around 2.5-3.0% over the same period. This stability is supported by the UAE dirham’s peg to the US dollar and administered pricing for several essential goods.
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