Riyadh – Mubasher: Moody’s Investors Service "Moody’s" has affirmed Saudi Arabia’s credit rating at (A1) with a stable outlook.
The affirmation of the kingdom’s A1 rating is supported by a robust, "albeit deteriorating", fiscal position, coupled with substantial external liquidity buffers, a large inventory of proved oil reserves with low extraction costs and prudent financial system regulation, Moody’s said in a report on Wednesday.
Strong growth in petrodollar revenues enabled the GCC nation to build up a gigantic asset cushion and slash its debts sharply, it noted.
Moody's added that Saudi Arabia's overall balance sheet remains "robust", although the slippage of global oil prices since 2014 has pushed its budget balance into deficit, reduced reserves and prompted large debt issuance.
“Saudi Arabia's credit challenges include its economic and fiscal exposures to oil price volatility, as well as its rigid government spending structure. Socio-economic challenges are visible in strong population growth and high unemployment,” the report added.
Although Saudi Arabia, the world's largest oil exporter, has made headway towards its ambitious and comprehensive reform plans, it will face a slew of challenges in putting them into effect, the New York-based rating agency highlighted.
Geopolitical risk also takes its toll on the Saudi government's credit profile in view of security threats in the region, in addition to the Arab nation's dispute with its arch-rival Iran.
The stable outlook reveals Moody’s view that risks to Saudi credit profile are broadly balanced.
“This credit analysis elaborates on Saudi Arabia’s credit profile in terms of economic strength, institutional strength, fiscal strength and susceptibility to event risk, which are the four main analytic factors in our Sovereign Bond Rating methodology,” the reported found.
