RIYADH: The international credit rating agency Moody’s updated its credit report for Saudi Arabia, affirming its “A1” rating for the Kingdom and revising the stable outlook rating to positive.
The rating is based on Moody’s assessment of the government’s track record of fiscal policy effectiveness and the comprehensive regulatory and economic reforms that will support the sustainability of the economic diversification efforts over the medium and long terms, Saudi Press Agency reported on Saturday.
These include the reforms and investments in various non-oil sectors that will reduce the Kingdom’s reliance on hydrocarbons over time.
The agency also lauded the important role of the government-sponsored diversification projects and initiatives, supported by private sector investment, and their positive impact on economic growth and improved outlook rating.
Moody’s report is a validation of the Kingdom’s fiscal policies as part of its Vision 2030 programs, and keeping debt at a moderate level, which is lower than most similarly rated sovereign debts, offering robust fiscal buffers and a competitive position in the global energy market, SPA added.
Meanwhile, S&P Global Ratings raised its unsolicited long- and short-term foreign and local currency sovereign credit ratings on Saudi Arabia to 'A/A-1' from 'A-/A-2'. The outlook on the long-term ratings is stable.
The global rating agency also revised upward its transfer and convertibility assessment to 'A+' from 'A'.
S&P said the stable outlook balances its expectation that the government's reform plans will support the development of the non-oil sector against the cyclicality of a still-hydrocarbon-focused economy, with fiscal and societal pressures tied to rapid population growth.
This comes as Saudi Arabia's significant reform momentum in recent years has begun to deliver structural improvements to its economy and fiscal and debt management. Among the reforms are measures to drive non-oil economic growth and widen the non-oil tax base, alongside significant social liberalization, supporting consumer demand.
“In addition, we believe the economy will continue to benefit from Saudi Arabia's leading role as the largest individual oil exporter globally. We, therefore, raised our sovereign ratings on Saudi Arabia to 'A/A-1' from 'A-/A-2' and assigned a stable outlook,” the report added.