Rating agency S&P has revised Saudi Arabia’s outlook to “positive” from “stable”, affirming the kingdom’s long-term foreign currency debt rating at “A-/A-2.”
“The positive outlook reflects our expectation of improving GDP growth and fiscal dynamics over the medium term, tied to the country’s emergence from the COVID-19 pandemic, improved oil sector prospects, and the government’s reform programs,” the agency said.
It expected that the Kingdom, in the medium term, will continue its policy to drive growth in the non-oil sectors through planned economic diversification, the “Saudization” of the workforce, and increased participation of women in the workforce to improve the work environment.
In addition to Saudi Arabia’s policy of structural diversification of the economy away from oil and hydrocarbon facilities, as the non-oil sector represents an increase of more than 50% of the GDP.
The rating agency in its report underlined the efforts to reform the social aspect, including an increase in the indicator of women’s share in the labor market in the total workforce, as well as the Kingdom’s target to reach net zero emissions by 2060 and increase investment in renewable energy, hydrogen and other alternative fuels.
In terms of flexibility and performance, the agency expected to support financial and external accounts in the years 2022-2025 as a result of government efforts to develop public finances.
It further expected a decrease in spending by 6% in the Kingdom’s budget for the year 2022 compared to 2021, an increase in revenues in line with the increase in oil prices by approximately 20%, in addition to an increase in the volume of oil production by at least 14%.
S&P’s amendment of the future outlook of the Kingdom’s credit rating affirms the effectiveness of the efforts and structural measures the country has taken over the past years, in accordance with the objectives of the Kingdom’s Vision 2030, which were positively reflected in the fiscal policy.