Saudi Arabia’s rating upgraded by Moody’s to Aa3

The Kingdom of Saudi Arabia's flag

Moody’s Ratings upgraded Saudi Arabia's long-term local and foreign currency issuer and senior unsecured ratings to Aa3 from A1. The outlook has been changed to stable from positive.

The upgrade reflects our assessment that economic diversification has continued to progress and the momentum will be sustained. Continued progress will, over time, further reduce Saudi Arabia's exposure to oil market developments and long-term carbon transition.

Moody’s added that although the fiscal space exercise and recalibration and reprioritisation of projects may temper the pace of implementation of some projects and the development of the non-hydrocarbon sectors, the focus on macroeconomic and fiscal sustainability is credit positive.

“Regularly reviewing projects to maximise the economic impact on the domestic economy and develop a domestic industrial base and related ecosystems will help the non-hydrocarbon economy develop more sustainably. Regular assessments of fiscal capacity and priorities will also anchor fiscal prudence and preserve the sovereign's relative balance sheet strength. We expect the government to run fiscal deficits of around 2-3% of GDP in the coming years in the absence of large shocks to oil prices and production,” the rating agency said. 

However, Moody’s said it expects the private sector GDP outside of the oil and gas industry to continue expanding by about 4% to 5% in the coming years, which is among the highest in the GCC region.

It is noteworthy that Saudi Arabia has received several credit rating upgrades from global agencies over the past two years. These upgrades reflect the Kingdom's ongoing efforts toward economic transformation through structural reforms and the adoption of fiscal policies that contribute to maintaining financial sustainability.

These measures enhance financial planning efficiency and reinforce the strength and resilience of the Kingdom's financial position.