Mubasher: Moody’s Investors Services said that Abu Dhabi's (Aa2) credit profile rating, with a stable outlook, is supported by its healthy government balance sheet, high per capita average incomes and its large oil and gas reserves,

Abu Dhabi’s main credit challenges include a lack of institutional transparency, regional geopolitical tensions and its dependence on hydrocarbons, the ratings agency said in an annual report this week.

"Although Abu Dhabi has taken measures to reduce the economy's sensitivity to oil price shocks, its non-oil sectors remain less developed than in Dubai," the report noted.

"The stable outlook on Abu Dhabi's sovereign rating reflects improvements in governance and progress on fiscal reforms that will support the return of the fiscal accounts to balance and contain event risks."

Abu Dhabi's very high economic strength reflects its considerable hydrocarbon wealth, the report highlighted, noting that at the same time, infrastructure investment and improved competitiveness continue to support non-hydrocarbon growth, despite a slowdown in government spending.

Abu Dhabi's commitment to the diversification agenda, coupled with ample resources and a record of implementation, will further reduce the dependence on oil in the coming decade, despite greater fiscal constraints.

Moreover, income from Abu Dhabi's large stock of foreign assets cushions the impact of declining oil prices. Moody's forecasts non-oil GDP to increase by 1.9% in 2018, and overall real GDP by 1.2%.