RIYADH, November 20, 2017 – International ratings agency Standard and Poor’s affirmed Saudi Arabia’s ‘A-/A-2’ long- and short-term foreign and local currency sovereign credit ratings. It said the outlook is stable.
S&P Global Ratings, which opened an office in the country last month, said in a report the stable outlook is based on its expectation that the Saudi authorities will take steps to consolidate public finances and maintain government liquid assets close to 100% of GDP over the next two years.
“We think the risks emanating from recent shifts in Saudi Arabia’s political power structures and societal norms, alongside various regional stresses, are balanced by the possibility that these structural reforms could empower Saudi citizens and make Saudi Arabia more attractive to investors over the medium term,” it added.
It said it could lower its ratings if further deterioration in the country’s public finances is observed.
The international agency also said it could raise the ratings if Saudi Arabia’s economic growth prospects improved markedly beyond our current assumptions.
The Saudi Ministry of Finance issued fresh statistics on Sunday showing that the Kingdom’s non-oil sector grew by 80 percent in the third quarter of this year, with revenues reaching 47.8 billion Saudi riyals ($12.7 billion) during that period. The deficit fell by 40 percent year-on-year to 121.5 billion riyals as revenues reached 450.1 billion riyals since the start of this year, up 23 percent from a year ago.
The “figures show that we continue to move toward our ambitious economic reform objectives for the long term, including the delivery of a balanced budget,” Finance Minister Mohammed Al Jadaan said, adding that the country is on track to achieve its budget projections for 2017.
“Whilst economic challenges remain, the economic reforms and measures that are set in the Fiscal Balance Program within Saudi Vision 2030 have proved effective, contributing to an increase in non-oil revenues, and we are making progress in creating a stronger and more diversified economy,” Al Jadaan added in a statement.
“Our third quarterly budget update demonstrates our long-term commitment to increase our levels of transparency and financial disclosure. We know this is vitally important in maintaining the confidence of all our stakeholders if we are to deliver our vision for the Kingdom.”
He also cited a recent International Monetary Fund (IMF) report which he said indicates “great confidence” in the long term financial and economic outlook of the country.
Dr Nadir Mohammed, the World Bank’s Country Director for GCC countries, said on Thursday that economic activity in Saudi Arabia is set to accelerate next year, with the non-oil sector leading the way.
S&P Global Ratings has opened an office in Riyadh after it was the first international ratings agency to obtain a licence from Saudi Arabia’s Capital Market Authority. A statement at the time said: “S&P Global Ratings’ entry into Saudi Arabia comes at a time of unprecedented economic and social reform, as the Kingdom’s leadership seeks to implement Saudi Vision 2030″.