Moody's Investors Service has just affirmed Saudi Arabia's Aa3 long-term issuer rating and maintained a stable outlook on the rating. No doubt, this reflects the Kingdom's ample financial assets, which will allow it to weather a period of lower oil revenues and maintain a fiscal profile compatible with the current rating.

Moody's long-term and short-term country ceilings for bonds and bank deposits for Saudi Arabia are unaffected by this rating action and remain at Aa3/P-1.

Saudi Arabia's Aa3 rating retains a stable outlook because the government's very substantial financial resources and low indebtedness obviously indicate that the Kingdom's financial strength will remain solid over the coming years, outweighing the negative impact of the recent fall in oil prices. Saudi Arabia is known to have very substantial financial resources that can support a period of fiscal deficits.

Moody's expects that the financing of the government deficits in the coming two years will come from a combination of debt issuance and drawing down of financial assets. While the ratio of government debt to GDP is thus likely to rise over that period, Moody's expects it to remain very low in comparison to other similarly rated sovereigns and to not pose credit concerns.

Approximately, 87 percent of government revenues came from oil in 2014. However, the Saudi Arabian Monetary Agency has foreign exchange reserves equivalent to about 100 percent of GDP, as well as considerable domestic financial assets.

Even if oil prices were to remain at current levels for the next two years, the government's financial resources would still be substantial, enabling it to finance deficits without a major increase in government debt.

Moody's base case is for oil prices to gradually rise, reaching close to $80 per barrel by 2018. This scenario would imply a gradual reduction in Saudi Arabia's budget deficits over the next few years back to single-digit levels as a percentage of GDP.

In fact, the Kingdom has taken a number of wise tactical calls by building defenses against oil price vulnerability. Government debt is at a record low, the sukuk markets have developed and there is comfortable cushion of reserves.

What is more challenging is working toward a strategy that will reduce reliance on such tactical calls. The fiscal system will have to be remodeled sooner or later and it will be good to start working toward better managing recurrent expenditures and developing revenue sources that are not linked to the oil sector.