Vision 2030 may lead to Saudi ratings boost

Updated 15 May 2016

Vision 2030 may lead to Saudi ratings boost

JEDDAH: Ambitious plans announced by Saudi Arabia last month to diversify its economy could lead to a credit ratings upgrade in the future, according to Moody’s Investors Service.

In its latest report, the rating agency highlighted Deputy Crown Prince Mohammed bin Salman’s Vision 2030 reforms that include tax rises, an efficiency drive and plans to give a bigger role to the private sector.
Although Moody’s downgraded Saudi Arabia's long-term issuer rating by one notch to A1 Saturday, it gave the Kingdom a stable outlook, saying sweeping economic reforms announced by the government last month will stabilize the state budget.
Moody’s also said it was uncertain how Saudi Arabia would fund its budget deficit averaging 9.5 percent of gross domestic product between 2016 and 2020, which would require total financing of $324 billion.
Economic experts, however, raised doubts over Moody’s downgrade.
“We don't think this is realistic given the ongoing rebalancing in the oil market. We also think that Moody's is not paying enough attention to ongoing fiscal consolidation efforts,” said James Reeve, deputy chief economist and assistant general manager, Samba Financial Group.
“Moody's ratings cut makes sense if you believe its oil price forecast for this year, which is only slightly above $30 per barrel,” Reeve told Arab News.
John Sfakianakis, director of economic research at the Gulf Research Center, said: “This is the last in a series of downgrades which was more expected than not. The rating of Saudi Arabia henceforth would be determined by the price of oil and the country's fiscal management and its rate of growth in the short term. Over the medium term, the implementation of the vision and the overall management of the reform project will be a determining factor in gaining confidence.”

The rating agency acknowledged that Saudi Arabia’s credit profile remains very strong by comparison with the majority of Moody’s-rated sovereigns.
However, the drop in oil prices from their mid-2014 peaks has materially undermined the Kingdom’s credit profile, negatively affecting the economy, the government’s finances as well as both external accounts and reserve buffers.
Moody’s also said that Saudi Arabia will maintain a strongly positive net asset international investment position of around 50 percent of GDP by 2019, although this will be much lower than the 108 percent recorded in 2015.
The agency downgraded Oman by one notch to Baa1 with a stable outlook, and cut Bahrain by one notch to Ba2, deeper in junk territory, with a negative outlook.
Moody’s also confirmed the Aa2 ratings of the UAE and its biggest member, Abu Dhabi, but assigned a negative outlook to them.
The oil price collapse, from above $100 in early 2014 to around $46 on Friday, has intensified Saudi efforts to diversify the economy away from oil which makes up the majority of its revenue.
Prices have recovered some ground after touching 12-year lows earlier in 2016.
Brent crude futures settled down 0.5 percent at $47.83 a barrel On Friday. US crude settled 1 percent lower at $46.21, after touching a six-month high on Thursday.

First group of Sri Lankan Muslims begin Hajj journey

Updated 17 July 2019

First group of Sri Lankan Muslims begin Hajj journey

  • 4,000 to partake in this year’s pilgrimage after Saudi Arabia increased quota

COLOMBO: Nearly 180 Sri Lankan Hajj pilgrims left for Saudi Arabia on Monday night, but not before thanking the Kingdom for the comprehensive facilities offered to them.

Mohamed Hashim Mohamed Haleem, Sri Lanka’s minister of postal services and Muslim religious affairs, said that this year’s issuing of Hajj visas was smooth due to the new e-Hajj services introduced by the Saudi government. 

“We were able to process all 4,000 Hajj visas efficiently. All of them were issued well in time,” Haleem said.

He added that officials from his ministry will be available at the airport to assist the pilgrims with their departures.

The minister said the flights of pilgrims this year will be ferried by both Saudi Arabian Airlines and Sri Lankan Airlines. Haleem, who intends to participate in this year’s Hajj, said that the last flight of Sri Lankan pilgrims will leave Colombo on Aug. 7.

Sajjath Mohammed, a journalist from Madawala News, praised the e-Hajj service, saying: “The biometric services for the visas were available to pilgrims in Kandy and Batticaloa in addition to Colombo, the capital of the island.”

Rizmi Reyal, president of the International Airline Ticketing Academy in Sri Lanka, said that this year the Hajj services from Colombo have been enhanced to give a better experience to the pilgrims. He thanked the Saudi government, the Muslim Religious Affairs Ministry in Colombo, the Saudi Embassy in Colombo and the Sri Lankan Embassy in Riyadh for playing their part in these improvements.

The Sri Lankan government will also send a medical team to attend to any urgent needs of the pilgrims before they are taken to the nearest medical facilities in the two holy cities.