S&P Global Ratings has upgraded Saudi Arabia’s outlook from stable to positive, highlighting the potential for future ratings increases. This change comes as the kingdom advances its extensive economic reforms aimed at diversifying revenue sources and boosting the non-oil sector.
The positive outlook is based on the expectation that Saudi Arabia’s broad reforms and investments will support the development of its non-oil economy while maintaining sustainable public finances, according to S&P analysts.
S&P affirmed the country’s long-term foreign currency debt rating at A, noting potential upgrades in the next two years if reforms lead to consistent GDP per capita growth.
However, the outlook could face risks if there is significant fiscal weakening. Despite these risks, Saudi Arabia is well-positioned to handle increased investment spending, rising debt levels, and potential declines in oil revenues.
The Vision 2030 agenda, focused on recalibrating priorities and timelines for infrastructure projects, is expected to help manage public finance pressures. Initiated in 2016 by Crown Prince Mohammed bin Salman, Vision 2030 aims to reduce the economy’s reliance on oil by creating new industries and jobs.
S&P projects Saudi Arabia will have smaller current account surpluses of about 1.2% of GDP through 2027, contrasting with the International Monetary Fund’s forecast of deficits from 2024 to 2029.