Standard & Poor’s (S&P), a US-based financial services company, has confirmed the credit rating of Saudi Arabia credit rating at (A-), with a stable outlook.
After the downturn in the Saudi economy in 2020, it will return to positive growth during 2021, Standard & Poor’s predicted.
Standard & Poor’s also suggested that the current account level will return to record surplus while reducing the deficit ratios in public finances, based on the improvement in global macroeconomic conditions, and the recovery of oil prices as the world begins to recover from the pandemic.
Standard & Poor’s Saudi Arabia
The credit rating agency indicated that the Saudi government continues to achieve its 2030 Vision, confirming that it has achieved many important achievements in terms of social reforms and promoting women’s rights.
According to the agency, the stable outlook indicates expectations that the financial position and net foreign assets will remain strong over the next two years, enough to support the credit rating.
Standard & Poor’s also pointed out that Saudi Arabia still possesses strong sovereign assets. The Kingdom is the only country in the world that maintains a large capacity to export surplus oil, the agency said.
The agency said Saudi Arabia is able to increase or decrease production by about two million barrels per day within days, in addition to its large production capacity and its leading role in the oil markets and the Organization of Petroleum Exporting Countries (OPEC).
Percentage of budget deficit
The credit rating agency estimated in its report that the budget deficit for the fiscal year 2021 will reach about 5% of GDP.
According to the agency’s estimates, the current account will achieve a surplus of 4.8% of GDP for the current fiscal year.
S&P’s lowered its estimate of the size of public debt as a percentage of GDP for this year, to 30.2%, compared to 38.2% in last September’s report.
Standard & Poor’s suggested that the Saudi government would use to support domestic capital expenditures and finance major projects, through the Public Investment Fund and the National Development Fund.
Keep reading: Standard & Poor’s Expects Gulf Economic Recovery To Be Slow
