JEDDAH — S&P Global Ratings affirmed its ‘A-/A-2’ unsolicited long and short-term foreign and local currency sovereign credit ratings on Saudi

Arabia. The outlook is stable. The stable outlook reflects S&P expectation that Saudi Arabia will maintain a pace of moderate economic growth and retain strong government and external balance sheets over the next two years, despite wider fiscal deficits.

“We could raise the ratings if Saudi Arabia’s economic growth prospects improve beyond our current expectations, for example, as a result of a more diversified economy,” S&P Global Ratings said in a statement.

It added: An unexpected materialization of contingent liabilities or a buildup of arrears could also place additional pressure on expenditure. Additionally, the ratings could come under pressure if we observed a significant increase in domestic or regional political instability.

The ratings on Saudi Arabia are supported by its strong external and fiscal stock positions, it added.

“We expect that the government will try to reduce its budgeted expenditure to achieve its goal of a balanced budget by 2023, especially in light of oil production cuts following the December 2018 Opec agreement,” S&P said.

“However, our fiscal expectations have weakened since our last review, due to our revised oil price assumptions, lower expected oil production volumes, and higher budgeted fiscal expenditure,” the report noted.

The report added that the Saudi government has articulated an ambitious strategy to reduce the economy’s dependency on oil and imported labor, to transform the domestic education and job market, and balance the budget by 2023. — SG