RIYADH: Fitch Ratings has revised the outlook on Saudi Arabia's Long-Term Foreign-Currency Issuer Default Rating, or IDR, to Positive from Stable and affirmed the rating at A.
The outlook’s revision reflects the Kingdom’s improvements in its sovereign balance sheet, driven by a higher oil revenue and its commitment to fiscal consolidation.
Government debt and gross domestic product are expected to remain below 30 percent until 2025, the credit rating agency forecast.
The Saudi government is also expected to retain significant fiscal buffers, including deposits at the central bank in excess of 10 percent of GDP.
Fitch also expected that Saudi Arabia will record budget surpluses in 2022-2023 for the first time since 2013, equivalent to 6.7 and 3.5 percent of GDP, respectively.
During 2022 and 2023, Brent crude oil prices are presumed to average $100/bbl and $80/bbl, while Saudi Arabia's oil production will average 10.7 million bpd and 11.1 million bpd, respectively.
These would be the Kingdom’s highest sustained levels of oil production, Fitch added.
It noted that Saudi oil giant Aramco aims to increase capacity to 12.6 million bpd in 2025 and 13.3 million bpd by 2027, up from its current 12.2 million bpd.
Adding that a $10/bbl movement in oil prices would change the agency’s budget deficit forecast by 2.3 percent of GDP.
Similarly, a one million bpd difference in production would change its fiscal deficit forecast also by 2.3 percent of GDP.
