Fitch Ratings Affirms ‘A+’ Outlook for Saudi Arabia as Finance Ministry Pushes Back Date of Deficit Elimination

Fitch Ratings on Thursday affirmed Saudi Arabia’s long-term foreign-currency Issuer Default Rating (IDR) at ‘A+’ with a stable outlook, saying the ratings are “supported by strong fiscal and external balance sheets, including exceptionally high international reserves, low government debt, significant government assets and strong commitment to an ambitious reform agenda.”

The Fitch report said central government deficit is expected to narrow to 8.7 percent of GDP in 2017, from 17.2 percent in 2016, largely as a result of higher oil prices and because clearance of arrears that widened the 2016 deficit by 4.4 percent of GDP will no longer be necessary, according to a report in Al Arabiya.

“The deficit will shrink more moderately in subsequent years to 5.4 percent of GDP in 2019. The government has indicated that expenditure may rise 4 percent next year, but a number of revenue measures should still lead to a significant improvement of the fiscal position,” the report said.

Saudi Arabia’s government plans to push back the target date for eliminating a state budget deficit caused by low oil prices to 2023 from 2020, according to sources cited by a Reuters report who were briefed by finance ministry officials.

The 2020 target for eliminating the deficit, which totaled a record $98 billion in 2015, was part of a long-term fiscal plan that Riyadh released in December, Reuters reports. Officials are now moving the target back three years to avoid slowing economic growth excessively and hurting the economy, Jadaan told a seminar closed to reporters.