The S&P has updated its Saudi Arabia's credit rating report affirming its rating at "A-" with a stable outlook. On its report issued Monday, the agency expected a rebound in economic growth in 2021. It also expected a return in the current account level to surplus with the reduction of the deficit rates in the public finances in 2021 and a sharp rebound in real non-oil economic activity in the second quarter of 2021. The agency highlighted the improvements in the real estate, manufacturing, and wholesale and retail trade, restaurants and hotels sectors. Moreover, S&P estimated that the public finances budget deficit for the fiscal year 2021 to reach about (4.3%) compared to the (5%) expectation on its report published in March considering the quality of the sovereign assets of the Central Bank (SAMA) and the Public Investment Fund (PIF). In addition, the agency estimated that the current account will achieve a surplus of 3.3% of GDP for the fiscal year 2021 and 2.5% in the period between 2021-2024. Furthermore, the agency expected the size of the public debt as a percentage of GDP for the year 2021 to be around (30.2%) compared to the (4.1%) contraction in the year 2020. S&P expects the real GDP growth of the Kingdom's economy to be (2.4%) in the period between 2021-2024. The agency also indicated that Saudi Arabia is one of the few countries in the region that has implemented strong structural reforms at the public finances level, which contributed to the growth of non-oil revenues which amounted to about half of total revenues in the year 2020. In addition, the agency highlighted Saudi Arabia's unique position in the oil market and among OPEC members, which provide it with supply-side pricing power and financial flexibility that other oil producers lack. S&P further indicated that the government is expected to support local capital expenditures and finance major projects through the Public Investment Fund (PIF) and the National Development Fund (NDF). Measures will remain to support growth and foreign direct investment, which rose by 20% in 2020 and 11.3% in the first quarter of 2021. The agency also stated that the government is continuing to achieve the Kingdom's Vision 2030 announced in 2016. The agency highlighted the achievements with relation to diversifying the economy away from oil and supporting the housing initiatives, which aim to increase home ownership to 70% by 2030. This is in addition to other important achievements made on social reform and the women's rights fronts. The agency commented on the decision to amend the name of the "Saudi Arabian Monetary Agency" to the "Central Bank of Saudi Arabia" and updating its mandate to include supporting economic growth, maintaining monetary stability, and supporting financial sector stability. This is in addition to enhancing confidence especially by providing stimulus packages to small enterprises and injecting liquidity into the banking sector during the pandemic. — SPA
