Moody’s expects the first Saudi budget surplus in 9 years

Saudi budget will have a surplus of 4.8 percent of GDP this year and 5.2 percent next year, breaking an eight-year streak of budget deficits that began in 2014, according to Moody’s.

Based on the Kingdom’s continued commitment to improving spending policy, “Moody’s” updated its credit opinion on the Kingdom, indicating that the Kingdom will be able to reverse most of the increase in public debt in the year of the Corona pandemic 2020.

“Moody’s,” said that Saudi Arabia will be able to rebuild its financial reserves in the coming years despite rising oil prices, increasing its efficiency, demonstrating a more effective framework for public financial management as well as a commitment to fiscal reduction and long-term fiscal sustainability.

According to the agency, the Kingdom’s real economy would rise by 7.2 percent this year and 4.6 percent the next year.

According to a statement from Saudi Arabia’s National Center for Debt Management, the agency’s confirmation of the Kingdom’s classification came as a result of the government’s continued development of fiscal policy and ability to respond and adapt to fluctuating oil prices, demonstrating a commitment to controlling public finances and financial sustainability in the long term.

The agency also predicted that the Kingdom’s real GDP would grow by 5.0 percent on average from 2021 to 2023, owing to continued recovery from the Corona pandemic, as well as remarkable progress in economic diversification, development, and capital projects, as well as limiting the decline in oil production.

Despite the surge in oil prices, Moody expects the Kingdom to maintain its commitment to better fiscal control in the medium term, as well as to continue improving spending policy and increasing efficiency, which demonstrates a more efficient framework for public fiscal policy.

Moody’s reports reflect the positive impact of the Kingdom’s structural measures and reforms over the last five years, as well as tangible progress in improving the business environment, which has positively impacted fiscal policy effectiveness and government work efficiency.