Moody's Investors Service affirmed today the Kingdom of Saudi Arabia's rating at A1, while its future outlook was modified from stable to negative as a result of external shocks following the novel Coronavirus pandemic, and the reason for modifying the future outlook is due to the negative risks that the Kingdom of Saudi Arabia may face as a result of fluctuations in the oil price resulting from coronavirus and the uncertainty resulting from the Kingdom's dealings to mitigate the effects of these factors, through the balance of debt and oil revenues. In its credit report, Moody's stressed that the Kingdom's rating is also supported by an effective monetary policy that maintains the credibility of the exchange rate peg, overall financial and economic stability, and signs to improve the effectiveness of fiscal policy resulting from structural financial reforms, including a medium-term public financial management framework, indicating that plans to diversify the Kingdom of Saudi Arabia's economy away from oil could contribute to raising growth potential in the medium term. On the public finance, Moody's raised its estimate for the 2020 budget deficit from 8.7% to 12% as a percentage of GDP. Moody's estimated that the size of the public debt as a percentage of GDP will reach 38% for the year 2020 and up to 45% in the medium term. Moody's noted that the Kingdom is the second largest oil producer (including natural and condensed gas) in the world, and has significant oil reserves, in addition to the lowest extraction costs worldwide and the long experience that provides the Kingdom with a high degree of competitive advantage over other oil producers. It is Noteworthy that Fitch Ratings announced its rating for the Kingdom last week, which confirmed the long-term credit rating of Saudi Arabia at "A" with a stable future outlook. These positive estimations by the global rating agencies confirm the great confidence enjoyed by the Saudi economy, as well as the strength of its financial position in facing challenges, especially in light of crises in general and the current exceptional circumstances the world is currently experiencing.
