S&P: Institutional Oversight Strengthens as Saudi Arabia Advances Vision 2030 Goals

Standard & Poor’s said its recent upgrade of Saudi Arabia’s credit rating reflects the country’s ongoing social and economic transformation, underpinned by improved governance, institutional frameworks, and the deepening of domestic financial markets.

This month, the agency raised Saudi Arabia’s credit rating for local and foreign currencies to A+ with a stable outlook, citing continued progress in economic diversification, the expansion of the non-oil sector, and the development of the domestic capital market. These factors, it said, help balance risks associated with rising external sovereign debt linked to Vision 2030 investments and debt servicing costs.

Institutional oversight has become more pronounced as Saudi Arabia advances its Vision 2030 objectives, S&P noted, pointing to adjustments in project priorities and timelines that signal greater flexibility and coordination in managing capital expenditures and debt issuances.

Public and private investments are focused on developing new sectors, including tourism, manufacturing, and mining, which are expected to accelerate economic diversification and reduce reliance on oil and gas, the agency said.

S&P projected that these investments will drive higher consumption among the Kingdom’s population of more than 35 million and gradually enhance productive capacity. Over the longer term, it expects Saudi Arabia to emerge as a more resilient and diversified economy, with expanded employment opportunities.

The agency estimated that Vision 2030 projects will require significant financing, exceeding $1 trillion, from the government, state-related entities, and banks. While borrowing and investment execution are expected to proceed gradually, S&P forecast a measured decline in the government’s net asset position, which it still expects to remain strong at around 32% of GDP by 2028. Despite rising external financing needs, the Kingdom is also projected to remain a net external creditor over the next four years.

External debt is expected to increase by about 10 percentage points in 2024, reaching 39% of GDP, driven by net external borrowing of $36 billion from banks, $19 billion from the government, $10 billion from the Public Investment Fund, and $9 billion from Saudi Aramco.

S&P praised Saudi Arabia’s efforts to stimulate investment, which it said will bolster non-oil sector growth and enhance economic resilience over the medium term. It expects real GDP growth to average 4% from 2025 to 2028.

The agency also forecast the budget deficit to average 4.2% of GDP over the same period, citing increased transformational spending that supports economic diversification. Despite this, it expects the Kingdom to maintain a strong net foreign asset position.