Finance Ministry confirms strong Saudi economic fundamentals

RIYADH: The Finance Ministry on Wednesday said Fitch Ratings Inc.’s outlook for the Saudi economy has moved from negative to stable, adding that the recent downgrade to the sovereign rating was based on a quantitative, number-driven analysis and was anticipated.
The ministry said 2016 projected revenues are SR528 billion ($141 billion), of which SR199 billion represent the non-oil sector, or 38 percent of total revenues.
The ministry said last year saw the launch of Vision 2030 and the National Transformation Program (NTP), which among many other initiatives will contribute to reaching a balanced budget by 2020.
The government has increased its funding flexibility by tapping external credit markets for the first time and opening up local capital markets to foreign investors, the ministry said, adding that the Kingdom’s oil policy has resulted in a more stable global oil price environment.
Meanwhile, the Saudi economy has structurally aligned itself to a lower oil price environment, as reflected in a more sustainable balancing price for its fiscal and current accounts.
Finance Minister Mohammed Al-Jadaan said: “The fundamentals of the Saudi economy remain strong as the Kingdom’s balance sheet remains strong, with SAMA’s FX assets estimated at 84 percent of gross domestic product (GDP), the third-largest in GDP terms globally. General government assets are considerably above 100 percent of GDP.”
He added: “Through Vision 2030, a number of concrete structural measures have already been rolled out, with the twin goals of decreasing the Kingdom’s fiscal dependence on hydrocarbons and encouraging economic diversification. The government has also made considerable progress in enhancing efficiency by reigning in overspending and optimizing expenditure.”
He concluded: “These efforts have been made possible through strengthened governance, institutionalization of structural reforms and enhanced transparency.”