Fitch, a worldwide credit rating agency, downgraded Saudi Arabia’s future outlook to “stable” today, Thursday.
It pointed to a significant increase in oil prices and the government’s continued commitment to controlling public finances. However, Fitch maintained the kingdom’s sovereign rating at A. The agency stated that Saudi foreign funds are still large, despite the decline in recent years.
Fitch expected the Saudi budget deficit to shrink to 3.3% of GDP in 2021. The agency reported that unemployment among Saudis has decreased since 2020.
In terms of monetary policy, the agency indicated that Saudi Arabia follows oil price patterns and anticipates budget spending to improve in 2021, according to budget plans.
The International Monetary Fund predicted in July that the Saudi economy will rebound quickly from the Covid-19 outbreak, with non-oil economic growth of 4.3% this year and total real GDP growth of 2.4%.
The Saudi economy has shown signs of improvement since the end of the year.
The IMF said that the investments of the sovereign wealth fund in the Kingdom (Public Investment Fund) are expected to offset the negative impact on growth from the pressure of government spending.
It stressed that the sovereign fund’s investments are a pivotal part of the country’s economic development program (Vision 2030), which aims to reduce the economy’s dependence on oil.
The statement said that the fund’s executives “stressed the importance of public financial monitoring and a strong framework for managing sovereign assets, given the growing role of the Public Investment Fund and public-private partnerships in the economy.”Top of Form