Publisher: Maaal International Media Company
License: 465734
S&P has updated its Saudi Arabia’s credit rating Outlook Revised to Positive On Improving Fiscal And Economic Growth Dynamics, ‘A-/A-2’ Ratings Affirmed
The credit rating agency, S&P, updated its outlook for the Kingdom of Saudi Arabia from a stable outlook to a positive outlook, and at the same time, the agency affirmed the long- and short-term foreign and local currency sovereign credit ratings to “A- / A-2”. The positive outlook reflects the improved GDP growth and public finances in the medium term, linked to the Kingdom’s recovery from the COVID-19 pandemic impact, developments in the oil sector, and ongoing government reform programs.
The agency also expected that the Kingdom, in the medium term, will continue its policy to drive growth in the non-oil sectors through planned economic diversification, the “Saudization” of the workforce and increased participation of women in the workforce to improve the work environment.
In addition to the Kingdom’s policy of structural diversification of the economy away from oil and hydrocarbon facilities, where the non-oil sector represents an increase of more than 50% of the gross domestic product, significantly higher than a decade ago.
The report also indicates the efforts to reform the social aspect included an increase in the indicator of women’s share in the labor market in the total workforce, in addition to the Kingdom’s aim to reach net zero emissions by 2060, the kingdom aims to increase investment in renewable energy, hydrogen and other alternative fuels.
In terms of flexibility and performance, the agency expected to support financial and external accounts in the years 2022-2025, as a result of government efforts to develop public finances.
While the agency expected that the Kingdom’s budget for the year 2022 will witness a decrease in spending by 6% compared to the year 2021, the revenues expected to increase as a result of the increase in oil prices by approximately 20%, in addition to an increase in the volume of oil production by at least 14%.
S&P’s amendment of the future outlook of the Kingdom’s credit rating to a positive outlook came as an affirmation of the effectiveness of the efforts and structural measures taken by the Kingdom over the past years in accordance with the objectives of the Kingdom’s Vision 2030, which were positively reflected in the fiscal policy.