Boost in Ratings for Saudi Arabia Reform Program
Saudi Arabia Reforms – Political reforms in Saudi Arabia have potentially lifted the country’s appeal to investors, as well as widening opportunities for Saudi citizens, according to a report out today from New York-based credit ratings agency Standard & Poor’s.
The agency said its ratings on Saudi Arabia debt were unchanged at ‘A-/A-2’ , and the outlook remained ‘stable’.
The stable outlook was based on S&P’s expectation that the Saudi authorities would continue to take steps to consolidate public finances and maintain government liquid assets close to 100 percent of GDP over the next two years.
The agency said: “We think the risks emanating from recent shifts in Saudi Arabia’s political power structures and societal norms, alongside various regional stresses, are balanced by the possibility that these structural reforms could empower Saudi citizens and make Saudi Arabia more attractive to investors over the medium term.”
S&P said it could lower its ratings in the event of further deterioration in Saudi Arabia’s public finances. “Fiscal weakening could entail prolonged double-digit central government deficits as a percentage of GDP, a quicker drawdown of fiscal assets, or an unexpected materialization of contingent liabilities,” it said.
KSA’s debt ratings could also come under pressure if the agency observed a “significant” increase in domestic or regional political instability “as a result of the increasing centralization of power.”
Conversely, the agency could raise its ratings if Saudi Arabia’s economic growth prospects improved markedly beyond S&P’s current assumptions.
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