Fitch has revised Saudi Arabia’s outlook from “Stable” to “Negative” and affirmed the Long-Term Foreign-Currency Issuer Default Rating (IDR) at “A,” according to FitchRatings. The revised outlook reflects the continued weakening of the fiscal and balance sheets of Saudi Arabia, fueled by the coronavirus pandemic and declining oil prices.

  • Fitch forecasts a decline in Saudi’s sovereign net foreign assets (SNFA) to 60% of GDP by 2022, down from 72% of GDP in 2019-2020 due to debt issuance and reserve drawdowns.
  • Fitch expects the government budget deficit to fall to 12.8% of GDP in 2020, down from 4.5% of GDP in 2019.
  • Saudi’s fiscal deficits to decline to about 8% of GDP in 2021 and 5% of GDP in 2022, albeit Brent oil price recoveries and growth in crude oil production.
  • Saudi’s government anticipates stronger revenue recovery and spending cuts to narrow the fiscal deficit to 5% of GDP in 2021 and 3% of GDP in 2022.
  • Government and broader public balance sheet continues deteriorating but will remain stronger than those of most “A” category sovereigns. 
  • Government reserve is expected to fall to 16% of GDP by 2020 and 12% of GDP in 2022, from 18% of GDP in 2019.
  • Saudi GDP to contract by about a little over 4% this year due to oil production cuts and disruptions by the coronavirus.
  • IDR “A” rating also reflects the government’s structural fiscal measures to limit the impact of low oil prices and coronavirus pandemic on public finances.

Fitch ratings indicate a state’s or entity’s ability to repay debts and its level of default risk.