Fitch affirms Saudi Arabias credit rating at A

Riyadh –  Fitch Ratings has affirmed Saudi Arabia's credit rating at 'A' and revised the outlook to negative from stable amidst the COVID-19 pandemic and the oil price shock.

Despite the negative outlook, the kingdom’s ratings have demonstrated notable resilience with three consecutive rating affirmations by the three major credit rating agencies since the onset of the pandemic in March of this year, according to a press release on Monday.

Exceptional balance sheet strength and a track record of policy flexibility place Saudi Arabia in a favourable position to front these shocks.

Saudi Arabia’s economic support has proven more effective as compared with its peers. The GCC nation’s contraction in 2020, according to the International Monetary Fund (IMF), is predicted to be less severe than the G20 median, despite a significantly smaller support package.

The government’s commitment to medium-term consolidation and fiscal sustainability remains strong and has been supported by the swift implementation of structural fiscal measures. On this, Fitch said, “The government has taken a number of structural fiscal measures this year to limit the impact of lower oil prices and the coronavirus pandemic on public finances, demonstrating its commitment to fiscal consolidation."

The kingdom’s consolidation drive has structurally supported public finances and led to a remarkable revenue expansion.

Moreover, Fitch stressed that Saudi Arabia had amongst the strongest balance sheets for the rated countries, including one of the world's largest foreign reserves.

It also reduced its estimates on public debt from 38% of gross domestic product (GDP) in April to 35% of GDP for 2020.