Standard & Poor’s Ratings Services has affirmed its long- and short-term foreign and local currency sovereign credit ratings on the Kingdom of Saudi Arabia at ‘AA-/A-1+’. The outlook is stable.
The ratings on Saudi Arabia are supported by our view of the government’s very strong external and fiscal positions, which have been built over a number of years. By prudent macroeconomic management, the government has reduced its general government debt, generating additional fiscal space for countercyclical policies. The ratings are constrained by underdeveloped public institutions, lower GDP per capita relative to similarly rated sovereigns, and limited monetary flexibility. We note that Saudi Arabia is making tangible progress in transparency and data availability, most recently with the inaugural publication of data on the country’s international investment position.
The stable outlook balances our view of Saudi Arabia’s exceptionally strong fiscal balance sheet and net external asset position against its underdeveloped institutions, high dependence on oil windfall, and challenging demographic profile.
We could raise the ratings if Saudi Arabia makes tangible progress in addressing social issues, particularly unemployment, and in raising living standards.
The ratings could come under negative pressure if there is a sustained deterioration in the fiscal position, or a prolonged depletion in foreign assets, or if we believe that domestic and external stability is weakening.