S&P Global Ratings affirmed Saudi Arabia’s sovereign credit ratings at ‘A-/A-2’ with a stable outlook, saying the national economy will likely return to positive growth in 2021 with a reduction of the fiscal deficit ratios.
A number of experts asserted to Asharq Al-Awsat that the Saudi reforms and strong sovereign assets led to the current positive credit rating.
Saudi Shura Council member Fadl Bin Saad al-Buainain explained that the classification is a natural result of the Kingdom’s success in facing the coronavirus pandemic and the decline in oil prices over the past year.
Saudi Arabia also increased its spending to support the economy in maintaining its sovereign rating, which confirms its ability in managing the crisis and reducing its repercussions, according to Buainain.
He told Asharq Al-Awsat that the fiscal reforms implemented over the past years are very important, and their effects helped achieve financial stability.
The Shura council member also referred to the government measures during the pandemic, which strengthened confidence in its procedures as evidenced by the Edelman’s Trust Barometer that announced the Saudi government as the most trusted entity in the world.
Oil prices rose again to over $60 per barrel, while the government continued to reduce its budget deficit and increase non-oil revenues, which Buainain believes will positively affect the sovereign rating in the future.
He noted there are strong indications of a growth return in 2021, which will contribute to increasing non-oil revenues.
“It is important to synchronize the economy’s needs for more support and the public finance’s need for revenue growth,” said Buainain, indicating that this will be sufficient to strengthen the reforms and make it more sustainable while controlling and reducing public debt.
For his part, economist Khaled Ramadan explained to Asharq Al-Awsat that S&P's classification confirms the strength of the Saudi economy, predicting the ambitious structural reforms and the recovery of oil prices to support positive growth.
Ramadan reiterated the importance of Saudi Arabia's credit rating in the global debt market, especially with regard to the optimistic outlook for the Saudi economy during the next two years.
He indicated that the drop in the budget deficit and the increase in the balance surplus are among the most prominent manifestations of the upcoming recovery in the Kingdom's economy.
