•  Fitch Ratings maintains Saudi Arabia’s long-term foreign-currency issuer default rating (IDR) at ‘A+’ with a ‘stable’ outlook, highlighting robust fiscal and external balance sheets, with government debt/GDP and sovereign net foreign assets (SNFA) surpassing both ‘A’ and ‘AA’ medians, and significant fiscal buffers in deposits and other public sector assets.

•  Despite strengths in fiscal metrics, challenges persist, including oil dependence, low World Bank governance indicators, and susceptibility to geopolitical shocks, indicating areas for improvement in economic resilience and stability.

•  Saudi Arabia’s high reserve coverage ratio, equivalent to 16.5 months of current external payments, underscores financial strength.

Fitch Ratings has affirmed Saudi Arabia’s long-term foreign-currency issuer default rating (IDR) at ‘A+’ with a ‘stable’ outlook, citing the country’s robust fiscal and external balance sheets. 

Government debt/GDP and sovereign net foreign assets (SNFA) are notably stronger than both the ‘A’ and ‘AA’ medians, with significant fiscal buffers in the form of deposits and other public sector assets. 

Despite these strengths, challenges such as oil dependence, low World Bank governance indicators, and susceptibility to geopolitical shocks persist.

Saudi Arabia boasts one of the highest reserve coverage ratios among Fitch-rated sovereigns, equivalent to 16.5 months of current external payments. 

Fitch forecasts a budget deficit of 2.3% of GDP in 2024, aligning closely with 2023 figures and slightly exceeding the 1.9% of GDP budget plan.

The projected deficit is attributed to increased spending, expected to exceed the budget by 3.5% at SAR 1.3 trillion, driven by higher capital expenditure and procurement. 

Revenue is anticipated to surpass budget expectations, supported by performance-related dividends from Saudi Aramco, despite lower oil production and prices.

However, Fitch anticipates a wider budget deficit of 2.8% of GDP in 2025, influenced by aligning spending with budget plans, lower oil prices, and increased oil production. 

Oil dependence remains a concern, with oil revenue comprising approximately 60% of total budget revenue in 2024-2025, down from 90% a decade ago. 

Saudi Arabia’s fiscal break-even oil price is forecasted to remain above $90 per barrel in 2024 before decreasing to $85 per barrel in 2025, according to the rating agency.