JEDDAH, 25 November 2004 — Fitch Ratings, the international rating agency, yesterday assigned Saudi Arabia Long-term foreign currency and local currency ratings of ‘A’ with stable outlook and short-term rating of ‘F1’.
“The Fitch ratings reflect the strength and credibility of Saudi economy and its financial sector,” said Finance Minister Dr. Ibrahim Al-Assaf. “This is the first time Fitch is rating Saudi Arabia,” he said.
“The Kingdom wholly owns Saudi Aramco, the company which holds exclusive oil exploration and production rights within the Kingdom, and the government is, therefore, assured of a large foreign currency-denominated income stream through the medium term. Fitch considers this to be a fundamental rating strength,” the agency said.
The agency forecasts the 2004 fiscal surplus will be nearly 10 percent of GDP and the current account surplus will be more than $51 billion, or about 20 percent of GDP. “This year’s fiscal and external sector balances compare well not just with rating peers’, but in fact with all rated sovereigns’,” said James McCormack, Senior Director at Fitch’s Sovereigns team.
Although policy initiatives can take time to materialize fully in the Kingdom’s long-standing tradition of consensual decision-making, Fitch is encouraged by the recent intensity of economic reform efforts. These center on privatization, increasing labor market flexibility, attracting more foreign direct investment and liberalizing trade policies.
