Fitch Ratings raises Saudi Arabia’s outlook on strong fiscal buffers

Fitch Ratings raises Saudi Arabia’s outlook on strong fiscal buffers

Fitch Ratings has upgraded Saudi Arabia’s sovereign debt rating to ‘A+’ from ‘A’, citing the Gulf state’s robust fiscal and external balance sheets and significant reform momentum in recent years as the country advances its economic diversification strategy. “The upgrade of Saudi Arabia’s ratings reflects its strong fiscal and external balance sheets, with government debt/GDP and sovereign net foreign assets considerably stronger than both the ‘A’ and ‘AA’ medians and significant fiscal buffers in the form of deposits and other public sector assets,” said Fitch in a statement. Saudi Arabia’s foreign reserves excluding gold remained broadly stable in 2022, at $459bn as financial account outflows in the form of investments and deposits abroad offset the substantial current account surplus. Fitch said the kingdom has one of the highest reserve coverage ratios among rated sovereigns at 18 months of current external payments. The rating agency revised upward its estimate of the 2025 fiscal break-even oil price – the price oil needs to be at to balance the budget – to $76 a barrel from its previous forecast of $70 a barrel. It said the break-even price stood at $86 a barrel in 2022. Oil revenues are expected to account for about