Reuters/Ahmed Yosri
S&P Global Ratings has upgraded Saudi Arabia’s rating to “A+” from “A” with a stable outlook, citing socioeconomic and capital market reforms.
Strong non-oil growth and rising oil volumes from 2025 will support medium-term growth prospects, it said.
Saudi Arabia’s National Debt Management Center welcomed the upgrade, saying it would allow the kingdom to issue international bonds and sukuks at more favourable rates. The Finance Ministry has previously indicated that Saudi Arabia needs to borrow SAR139 billion ($37 billion) in 2025 to cover its budget deficit.
Real GDP growth is expected to average 4 percent over 2025-2028, thanks to continued momentum for investment in the construction and services sectors amid growing consumer demand.
Since the 2016 launch of the Vision 2030 programme, which hopes to diversify the economy away from oil, the country has achieved 87 percent of its 1,064 targets.
“Phased infrastructure spending, changing consumption patterns, and labour market developments will continue to strengthen economic resilience,” S&P said.
This marks an ongoing transition from the decade-old pro-cyclical government spending linked to oil prices.
The Public Investment Fund (PIF) is likely to invest $40 billion in the local economy per year towards giga/mega projects, the rating agency said, adding that the direct contribution of tourism to GDP almost doubled to 5 percent in 2024 from 2021.
Oil prices are anticipated to fall to $70 per barrel over 2025-2028 from $81 in 2023. However, the decline in Saudi Aramco dividends by one third this year will further dampen oil revenue.
“We expect the fiscal deficit will widen to 4.8 percent of GDP this year, from 2.8 percent in 2024,” it said.
Despite rising housing prices and some supply pressures, inflation will stay modest at 1.9 percent over the next four years, compared to 1.7 percent in 2024.
“Inflation will remain contained, partly owing to price caps and the peg to the US dollar,” S&P said.
