S&P revises Saudi debt outlook to positive

S&P revises Saudi debt outlook to positive

Bloomberg / Riyadh

Saudi Arabia had the outlook on its debt rating revised to positive from stable by S&P Global Ratings as oil, the kingdom’s main source of income, trades above $100 per barrel.

S&P revised the outlook while affirming the kingdom’s long-term foreign currency debt rating at A-, its seventh highest level, according to a statement on Friday.

“The positive outlook reflects our expectation of improving GDP growth and fiscal dynamics over the medium term, tied to the country’s emergence from the Covid-19 pandemic, improved oil sector prospects, and the government’s reform programmes,” S&P said.

The kingdom is expecting a budget surplus this year and raised its revenue forecast even before Russia’s war in Ukraine sent oil prices soaring. Despite Crown Prince Mohamed bin Salman’s plan to diversify the economy, energy revenue still dominates the Saudi economy and those of its Gulf neighbours. The International Monetary Fund estimates Saudi Arabia needs oil at $72.40 per barrel to balance its budget this year, way lower than current levels.

“In 2020, Saudi Arabia was hit hard by the twin shocks of the pandemic and lower global oil prices and demand, but since 2021, the country’s economy has rebounded as the wider global economy