RIYADH: Fitch Ratings has affirmed Saudi Arabia’s long-term foreign-currency issuer default rating at “A+” with a stable outlook.
The agency cited the Kingdom’s strong fiscal and external balance sheets, continued growth in the non-oil sector, and solid banking fundamentals as key drivers behind the rating.
Fitch also noted that Saudi Arabia’s government debt levels and sovereign net foreign assets remain well above the medians for “A” and “AA” rated countries, supported by significant fiscal buffers in the form of deposits and other public sector assets.
The latest rating action comes as Gulf economies navigate the impact of lower oil prices while advancing economic diversification plans. The “A+” rating reflects Saudi Arabia’s fiscal and external buffers built over years of high oil revenues, even as the Kingdom faces widening deficits due to large-scale investment spending.
In its rating commentary, Fitch stated: “Oil dependence, World Bank governance indicators and vulnerability to geopolitical shocks have improved but remain weaknesses.”
Despite pressure from reduced oil revenues and rising fiscal and current account deficits, Fitch emphasized that Saudi Arabia’s external reserves are expected to remain “large relative to peers,” averaging 12.8 months of current external payments in 2025 — well above the “A” median of 1.8 months.
However, the agency warned that the Kingdom is likely to gradually shift to a net external debtor position by 2027, due to sustained external borrowing and a strong domestic investment orientation.
The report also reviewed regional peers, highlighting that neighboring countries have maintained strong credit profiles. In July, the UAE’s long-term foreign-currency rating was affirmed at “AA-” with a stable outlook, supported by low consolidated government debt, a strong net external asset position, and high gross domestic product per capita.
Fitch also pointed to Abu Dhabi’s sovereign net foreign assets — equivalent to 157 percent of the UAE’s GDP in 2024 — as among the highest of all Fitch-rated sovereigns.
In May, Qatar retained its “AA” rating with a stable outlook, driven by its expanding liquefied natural gas production capacity and one of the highest per capita GDP levels globally. The agency highlighted Qatar’s flexible public finance framework as a key factor in enhancing economic resilience.
Similarly, in March, Kuwait’s long-term foreign-currency rating was reaffirmed at “AA-” with a stable outlook.
For Saudi Arabia, Fitch projected a budget deficit of 4 percent of GDP in 2025, mainly due to lower oil income and a significantly reduced dividend from Saudi Aramco.
“Growth in current spending should be contained, and we expect capex to fall in line with ongoing project recalibration,” the report stated.
The deficit is expected to narrow to 3.6 percent by 2027, supported by rising non-oil revenue, higher oil production, and government spending growing more slowly than nominal GDP.
Fitch also underscored the Kingdom’s ongoing economic transformation under Vision 2030. It noted that GDP rebasing led to a 14 percent upward revision of the 2024 headline GDP figure, “almost entirely due to a 28 percent increase in the non-oil private sector (now 56 percent of GDP).”
Real GDP growth is projected at 4.3 percent in 2025, rising to 4.7 percent in 2026 before easing to 3.6 percent in 2027, driven by increased oil production and steady expansion in the non-oil sector. Non-oil growth is forecast to average 4.5 percent during this period, underpinned by continued public and government-related entity spending.
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