Fitch Ratings gives Saudi Arabia an 'A+' rating with a stable outlook

Fitch Ratings is a financial rating agency that rates countries and companies based on their creditworthiness. Fitch Ratings' rating for Saudi Arabia is 'A+' with a stable outlook, due to sustained financial strength and significant improvement in the Kingdom's public debt control and fiscal management. 

The assessment reflects the Saudi government's efforts to increase the efficiency and transparency of fiscal and economic policy, improve expenditure discipline and reduce reliance on oil revenues. The government's efforts to promote greater participation of private investment in the economy, through the Vision 2030 initiative and energy policy reform, have also had a favourable impact on the Kingdom's rating. These reforms, combined with the executive's commitment to balanced budgets and fiscal discipline, have contributed to improving the country's macroeconomic and financial stability. Fitch expects that the reforms will continue to improve the credit profile and that the Kingdom will maintain long-term financial strength.

The agency also expects Saudi Arabia to further reduce dependence on oil revenues and continue to diversify its economy and improve trade activity and foreign direct investment. This is good news for the Arab country, as Fitch Ratings' rating is one of the most respected among investors. The upgrade of Saudi Arabia's rating also reflects an improvement in the country's economy due to financial stability, the implementation of structural reforms, an improving business climate and economic growth. So this result is a testament to the strength of the Saudi economy.

Mohammed bin Salman, Saudi crown prince, has hailed the seal of approval given by Fitch Ratings to Saudi Arabia with a stable outlook of "A+". The prince sees the rating as a sign that the country is taking steps to consolidate its economy and public finances, and that the private sector is receiving the support it needs to prosper. The prince expects the 'A+' rating to be reflected in increased foreign investment in Saudi Arabia, which will help boost the country's economic growth.

The Foreign Cash Reserve Statistics Agency (REFE) reported that the economy's current account surplus narrowed from $8bn in 2021 to $2bn in 2022. This decline was mainly due to a reduction in oil export revenues to $17bn in 2022 from $21bn in 2021. Among the main financial outflows, foreign deposits in the country rose to 11 billion in 2022 from 5 billion in 2021. Apart from that foreign direct investments (FDI) fell by 4 billion, while investments by large institutions such as the Public Investment Fund and pension funds were moderate.

So the REFE reported that foreign cash reserves, excluding gold, remained broadly stable in 2022 at 459 billion, offsetting financial outflows. However, reserves are expected to decline marginally to 445 billion in 2023-2024, due to a reduction in the current account surplus. This is mainly due to lower oil export revenues, as well as higher foreign deposits and lower FDI. Despite the challenges, Fitch Ratings expects the Saudi economy to recover at a moderate pace on the back of structural reform and improving financial conditions.