Saudi Arabia's large financial reserves support rating, facilitate public financing: Fitch

Riyadh City

Saudi Arabia's large financial reserves supports its rating and provides greater flexibility to facilitate public financing needs in light of the instability of oil revenues, according to Fitch Ratings.

Commenting on Saudi Arabia’s pre-budget statement for 2022 – according to National Debt Management Center’s (NDMC) statement - the Kingdom targets a fiscal reserve at the Saudi Central Bank (SAMA) of SAR 350 billion in 2022, which constitutes around 11% of GDP by Fitch’s estimate, expected to increase in the medium term.

The authorities had previously expected it to stabilize at a minimum level of SAR 265 billion in 2022-23.

The pre-budget statement expects public debt to remain stable in nominal value as of 2022 and decline as a share of GDP to 29.2% in 2023 and 27.6% in 2024, which is below Fitch’s estimates in July.

The statement from Fitch confirms the positive future directions of the Kingdom’s financial policies that seeks to pursue as an extension of the structural measures and reforms taken during the past five years, in accordance with the objectives of the Vision 2030.

This reflected positively on the global confidence in the strength of the Saudi economy and supported the positive outlook on the Kingdom’s financial sustainability future.

According to data compiled by Argaam, the Ministry of Finance said in its pre-budget statement on Sept. 30, that Saudi Arabia's revenues for the 2022 state budget are estimated at SAR 903 billion, with a forecast expenditure of SAR 955 billion and a deficit of SAR 52 billion.