By Andy Sambidge
Agency also reaffirms ratings of emirate, says it is in 'comfortable position'.
Fitch Ratings has affirmed the emirate of Ras Al Khaimah's (RAK) long-term foreign and local currency issuer default ratings (IDRs) with stable outlooks.
The short-term foreign currency IDR was also affirmed.
"Ras Al Khaimah enters a difficult year in a relatively comfortable position," said Richard Fox, head of Middle East and Africa Sovereign Ratings at Fitch.
"It completed a major infrastructure and borrowing programme in 2008 and now has no net financing need for the foreseeable future, with the budget projected to move back into surplus.
"Although economic growth will slow, alongside the slowdown in the UAE and other markets, it will remain supported by continued strong public investment in furtherance of RAK's ambition to develop and diversify the economy, while output is re-directed to faster growing parts of the region."
RAK's rating is underpinned first and foremost by its relatively low public debt ratio and prudent fiscal track record, Fitch added.
A tripling in public investment last year, to more than 24 percent of GDP, brought a temporary increase in the budget deficit to 6.3 percent of GDP.
However, with capital investment falling to a more normal, albeit still high 12 percent of GDP this year, the budget should move back into a comfortable surplus.
Fitch said Dubai has been an important market for RAK's construction materials and the slowdown there and in the region in general would have a negative impact on RAK's growth in 2009.