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S&P: Saudi Arabia’s Strong Net Asset Position is Major Support For its Rating

S&P: Saudi Arabia’s Strong Net Asset Position is Major Support For its Rating

Monday, 28 September, 2020 - 10:30
View shows the King Abdullah Financial District, north of Riyadh, Saudi Arabia, March 1, 2017. REUTERS/Faisal Al Nasser

Standard & Poor’s Global credit rating agency placed its credit rating of Saudi Arabia at A- / A-2 with a stable outlook.

In a statement, the agency said that the Kingdom’s strong net asset position remains a major support for its rating. The agency lowered its forecast for the economic contraction this year from 5% to 4.5%. It also lowered its forecast for the percentage of the budget deficit during this year from 12.6% to 11% of GDP.

According to the latest statistics issued by the Saudi Arabian Monetary Agency (SAMA), the Kingdom’s reserve assets at the end of July amounted to about 1.68 trillion riyals compared to 1.678 trillion riyals at the end of June, with an increase of 0.1 percent, equivalent to 2.1 billion riyals.

The total reserve assets of SAMA include gold, special drawing rights (SDRs), reserves with the International Monetary Fund, foreign exchange and deposits abroad, in addition to investments in securities abroad.

SAMA’s total assets amounted to 1.81 billion riyals (USD 483 billion) until July, registering a growth since the start of economic closure in the Kingdom, which was imposed by the outbreak of the Covid-19 pandemic.

On the other hand, Saudi Arabia has an ambitious sovereign wealth fund that is ranked eighth among state funds around the world.

Recent data revealed that the assets of Saudi Arabia’s Public Investment Fund (PIF) jumped 8 percent (USD 30 billion) in the latest classification, bringing total assets to 1.46 trillion riyals (USD 390 billion), up from the last assessment of the fund’s assets size, which amounted to USD 360 billion in August.

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