Capital Intelligence Ratings upheld Saudi Arabia's foreign and local currency ratings at 'A1/A+' for both short and long terms, while maintaining a “positive” outlook on the long-term ratings.

The affrmation has been attributed to the nation's robust external liquidity position, backed by consistent current account surpluses, a formidable net external creditor position, and favourable access to international capital markets. The ratings also reflect Saudi Arabia's sturdy public finances, characterised by the central government's low debt level, limited gross financing needs, substantial oil reserves, a resilient banking sector, and significant fiscal and external buffers that can absorb external shocks.

Projections indicate a budget deficit averaging 1.4% of GDP in the 2024-25 period, driven by fiscal discipline. While emphasising downside risks to the fiscal outlook, including global economic uncertainties, extended production cuts by the OPEC+ coalition, and tightened global financial conditions, the report underscores the potential for an upgrade in ratings if the economic and fiscal performance surpasses expectations. Significant reduction of reliance on hydrocarbon revenues by the government would also be a key to an upgrade.

The ratings follows the approval of the country’s state budget for 2024, which projects revenues at SAR 1.17 trillion (USD 312.5 billion) and expenditures at SAR 1.25 trillion, resulting in a deficit of SAR 79 billion. The Ministry of Finance anticipates the kingdom's GDP to grow at 4.4% this year, a significant increase from the estimated 0.03% in 2023.

The 2024 budget emphasises the authorities’ goal of stimulating growth in the non-oil economy by increasing spending and investment in infrastructure, local industry, and services. Sector-specific allocations include SAR 269 billion for the military (an 8.5% increase from the 2023 budget), SAR 214 billion for health and social development, and SAR 195 billion for education.

Meanwhile, the World Bank expects the kingdom’s GDP to rise 4.1% in 2024, driven by a surge in non-oil activities. The bank raised its 2024 economic growth expectations for Saudi Arabia by 0.8%, from the June 2023 forecast of 3.3%. It also revised its 2025 projections for the country to 4.2%, reflecting a 1.7% increase from the June 2023 forecast.

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