Riyadh – Mubasher: Fitch Ratings has affirmed Saudi Arabia's long-term foreign-currency issuer default rating (IDR) at “A+” with a stable outlook.
The rating was supported by the kingdom’s strong fiscal and external balance sheets, according to Fitch’s recent report.
On the other hand, the rating was weighed down by oil dependence, weak governance indicators compared with “A” category peers and high geopolitical risks.
The agency expected a decline in the central government’s deficit to 5.3% of gross domestic product (GDP) in 2018, or SAR 152 billion ($40.51 billion), compared to 9.3% in 2017, indicating “sharp increases in oil and non-oil revenue offset resurgent government spending.”
“We expect this to be reflected in a renewed widening of the overall budget deficit to 7.5% of GDP by 2020 as oil prices moderate to our baseline assumption of an average of $57.5 per barrel (for Brent),” the report highlighted.
The Saudi government has undertaken a number of measures to diversify its revenue base and trim the fiscal deficit following the oil prices plunge in mid-2014. Such measures have contributed to a 48% increase in non-oil revenue during the first nine months of 2018.
“We expect the full-year increase in 2018 to be a more moderate 21%, after 38% in 2017,” the report said.
Previously, the rating agency increased its growth projections for the Kingdom's economy by 2.2% for 2018.
