Riyadh – Mubasher: The credit rating agency, “Moody’s”, updated its credit rating for the Kingdom of Saudi Arabia at the level of “A1”, with a negative outlook, as a result of external shocks following the Corona virus pandemic.
The agency confirmed in a report issued, yesterday evening, Tuesday, that the structural reforms in the Kingdom led to the reduction of the fiscal deficit during the first quarter, according to a statement by the National Center for Debt Management in Saudi Arabia, today, Wednesday.
Moody’s report indicated that despite the Kingdom’s economic contraction in the first quarter of this year, the non-oil sector continued to develop and recover, supported by exceptionally strong growth in the development of infrastructure for real estate products, especially that one of the drivers of economic recovery, in addition to demand Consumer, is the exceptionally strong growth in real estate loans backed by government initiatives within the framework of the Housing Program as one of the Vision 2030 realization programs
Moody’s indicated that plans to diversify the economy in the Kingdom will contribute to raising growth in the medium to long term, stressing that structural and organizational reforms have supported improving competitiveness, as Saudi Arabia has improved in 9 out of 10 areas measured in the Doing Business 2020 report. Its ranking rose from 82nd in 2016 to 62nd in 2020 out of 190 countries.
In its report, the agency expected that the Kingdom’s real GDP growth would reach 1.6 and 5 percent for the years 2021 and 2022, respectively.
On the fiscal front, the agency lowered its estimate for the 2021 budget deficit from 6.2 percent to 4.7 percent of GDP.
The agency expected the current account surplus for the current year to reach about 3.4 percent of GDP, compared to a deficit of about 2.9 percent in its last report.
She indicated that the size of the Kingdom’s public debt as a percentage of GDP will reach 30.6 percent and 30.9 percent for the years 2021 and 2022 AD, respectively.
On the level of the Kingdom’s general budget, the agency confirmed that the budget figures revealed a clear structural improvement represented in the reduction of the non-oil public finance deficit to its lowest level in more than 6 years.
Moody’s credit rating reflects the positive structural reforms undertaken by the Kingdom during the past five years in accordance with the objectives of the Kingdom’s Vision 2030, which was positively reflected on the performance of monetary and macroeconomic policy, improving the effectiveness of fiscal policy, raising the efficiency of government work, and combating corruption, which came during the implementation of The government has undertaken structural and financial reforms since 2017 and pushed its comprehensive agenda of economic diversification.
The agency indicated that the Kingdom is the second largest oil producer (including condensed and natural gas) in the world, and has large oil reserves.
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