S&P updates Saudi Arabia’s outlook to positive as it recovers from COVID-19

By Arya M Nair, Official Reporter
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Saudi Arabia
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The International credit rating agency, Standard & Poors (S&P), has updated its outlook for Saudi Arabia to positive and assessed the Kingdom’s short and long-term foreign and local currency sovereign credit ratings to A-/A-2.

The agency said the positive future outlook reflects the strength of gross domestic product (GDP) growth, the country’s financial policies at the backdrop of its success in recovering from the repercussions of COVID-19, the sustainability of government reform programs drive in addition to the increasing growth of the non-oil economy which has made great strides in supporting the Kingdom’s financial and foreign indices.

S&P expects the Kingdom’s GDP to grow to its highs in ten years to a ceiling of 7.5 percent in 2022 with an expected financial surplus in the state budget of about 6.3 percent. It also forecasts a growth of the Saudi economy product capacity and a drive of the growth in the long run due to efforts of developing the general finances and mega economic reforms.

Dealing with flexibility and performance, the agency expects the support of the financial credits in 2022-2025 due to governmental efforts in developing the public finances and commitment to improving the spending and efficiency of expenditure despite oil high prices. The agency also forecasts no dramatic rise in sovereign debt costs in the Kingdom as most of the public debt portfolio is running at a fixed rate.

The agency described the inflation rates in the Kingdom as relatively low in comparison to its counterparts and that those rates would be under control in view of the government subsidizing fuel and food prices in addition to tying the local currency with the relatively-strong US dollar.

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