Moody's Investors Service announced that it has revised its outlook for the government of Saudi Arabia from (negative) to (stable).
The agency confirmed, in a report seen by (Namazone), the long-term rating of the issuer and the non-asset-backed basic rating at grade (A1).
The agency also confirmed the ratings of the non-asset-backed medium-term underlying issues at (A1 / P).
Changing the outlook to (stable) over the next few years reflects an increased likelihood that the kingdom's government will unwind the majority of the increase in its debt burden for 2020 while also maintaining on its financial reserves.
The foregoing opinion is based on Moody's assessment of the government's improvement in the government's record on the effectiveness of fiscal policy, which is evidenced by policy responses in both periods of low and high oil prices. Continuing commitment to correct public finances and financial sustainability in the Kingdom in the long term.
High oil prices will facilitate the expected financial improvement over the next several years, although the stable outlook also takes into account the expectation that oil prices will remain volatile. .
Moody's expects Saudi Arabia's fiscal deficit to fall to less than 2.5% of GDP in 2021 from 11.2% of GDP total in 2020, and remain close to balance for the next several years.
The government debt burden will therefore fall to less than 29% of GDP at the end of this year, and will drop to about 25% of GDP by 2025 from 32.5% of the GDP for 2020, reflecting the majority of contractions related to the Corona pandemic that affected the Kingdom's balance sheet.
