Saudi Arabia’s fiscal position remains strong, says Moody’s

Saudi Arabia’s fiscal position remains strong, according to Moody’s Global Credit Research report published on Friday.

But the report also pointed out that high oil dependency is a key credit challenge.

Moody’s goes on to say that while the government has announced ambitious and comprehensive reform plans, the implementation of reforms could be challenging

The stable outlook enjoyed by the Kingdom reflects Moody’s view that risks to Saudi Arabia’s credit profile are broadly balanced and anticipates only a mild real GDP contraction of 0.2 percent in 2017 due to lower oil production.

Budget deficit

Moody’s on Saudi Arabia forecasts a sizeable budget deficit of 10.5 percent of GDP in 2017, narrowing to 9.2 percent in 2018.

Over the medium-term, it forecasts that government’s revenue sources will become diversified, with oil and gas revenue declining to 54 per cent by 2020.

Moody’s - A1 rating outlook is supported by the Kingdom’s strong fiscal position, Saudi Arabia’s large oil and gas reserves at low production costs, high levels of external liquidity.

The annual update, “Government of Saudi Arabia -- A1 Stable, Annual Credit Analysis”, is now available on www.moodys.com.