S&P Affirms Saudi Arabia’s Creditworth Rating, at A-

Standard and Poor’s, the credit rating agency (S&P) has updated its Saudi Arabia’s credit rating report, reaffirming its rating at “A-“, with a stable outlook.

S&P estimated that the public finances budget deficit for the fiscal Year 2021 to reach about (4.3%) compared to the (5%) expectation on its report published, in March, considering the quality of the sovereign assets of the Central Bank (SAMA) and the Public Investment Fund (PIF), as it reported on Monday,

The agency also estimated that the current account will achieve a surplus of 3.3% of GDP, for the fiscal Year 2021 and 2.5% in the period between 2021-2024.

Furthermore, S&P expected the size of the public debt as a percentage of GDP for the Year 2021 to be around (30.2%) compared to the (4.1%) contraction in the year 2020.

It expects the real GDP growth of the Kingdom’s economy to be (2.4%) in the period between 2021-2024.

The agency also indicated that the Kingdom of Saudi Arabia is among few countries, in the region that has implemented strong structural reforms at the public finances level, which contributed to the growth of non-oil revenues, which amounted to about half of the total revenues, in the Year 2020.

S&P further indicated that the government is expected to support local capital expenditures and finance major projects, through the Public Investment Fund (PIF) and the National Development Fund (NDF).

The Public Investment Fund noted that it has assets worth $400 billion and plans to increase them to as much as $1.1 trillion by 2025, or more than doubling them.

It also aims to invest at least $40 billion, annually, in the local economy.

It also stated that the government is continuing to achieve the kingdom’s vision 2030 announced in 2016.

The agency highlighted other important achievements made on social reform and the women’s rights fronts.

Commenting on the decision to amend the name of the “Saudi Arabian Monetary Agency” to the “Central Bank of Saudi Arabia” and consolidating its mandate to include supporting economic growth, maintaining monetary stability, and supporting financial sector stability, the agency commended the step.

In addition, it praised the central bank role, in enhancing confidence, especially by providing stimulus packages to small and medium size enterprises, as well as injecting liquidity into the banking sector, during the pandemic.