Fitch Ratings has affirmed Saudi Arabia’s rating at A++ with a stable outlook. The agency highlighted that this classification reflects the Kingdom’s robust external financial strength. Notably, Saudi Arabia’s government debt-to-GDP ratio and net foreign assets surpass the average ‘A’ and ‘AA’ ratings. Furthermore, the country possesses substantial financial reserves, including deposits and other public sector assets.
Read also: Fitch revises outlook on Saudi to positive; affirms at ‘A’
However, Fitch underlined certain areas of concern. Saudi Arabia’s heavy reliance on oil and its relatively low rating on the World Bank’s governance indicators make it vulnerable to geopolitical shocks. Fitch’s report acknowledged that while Saudi Arabia has not been directly affected by the Gaza conflict thus far, the potential for escalation persists due to the nature of the conflict.
Six key factors
The report outlined six key assessment factors, including the strength of Saudi Arabia’s balance sheet, its significant external financial resources, a government debt increase below the average for A-rated countries, a more flexible fiscal policy, reliance on oil, and the development of the non-oil economy.
Fitch stated that Saudi Arabia’s total government debt to GDP ratio reached 26.5 percent of estimated GDP in 2023, which remains relatively low compared to the average of 50 percent for A-rated countries. However, it is projected to rise to 28 percent in 2024 and 30 percent in 2025. These forecasts take into account an assumption of average Brent crude prices of $80 per barrel in 2024 and $70 per barrel in 2025, which contribute to the budget deficit and restrict nominal GDP growth.
According to analysts, Fitch’s decision reflects the Kingdom’s strong financial and economic capacity, enabling Saudi Arabia to borrow additional funds if desired, without significant pressure.
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