Standard & Poor's Global Rating Agency kept Saudi Arabia's credit rating at A- with a stable outlook, expecting a recovery in growth until 2024 driven by higher oil prices, easing OPEC production quotas and increasing vaccination rates in Saudi Arabia.
According to the agency, after the effect of Covid-19 pandemic on the economy, the Kingdom of Saudi Arabia returned to ambitious investment projects linked to its strategy to reduce the economy's dependence on oil, as the Public Investment Fund and other entities in the oil and non-oil sectors are making significant investments.
The rating agency expects Saudi Arabia's deficit levels to decline, and real GDP growth is expected to average 2.4 percent after contracting by 4.1 percent in 2020.
Standard & Poor's indicated in its mid-year review that in 2021, higher oil prices will be offset in part by constrained annual Saudi oil production volumes. However, the monthly easing of quotas until 2021 and 2022 will support the Saudi oil sector and the economy.
The agency revealed that the total debt is expected to continue to increase until 2024 as the deficit is partially financed by the issuance of public debt, although Saudi Arabia will remain in the net asset position in its financial and external balances. Also, the reserves between 2021 and 2024 are expected to cover an average of 15 months of current account payments. Announcing that the significant enhancement of the net asset position or the improvement in growth prospects may lead to a credit rating upgrade.
Source (Al-Arabiya.net website, Edited)
