Riyadh, November 23, 2024 – In a significant development, Moody’s Investors Service has upgraded the Kingdom of Saudi Arabia’s credit rating to Aa3 in both local and foreign currencies, accompanied by a “stable” outlook. This upgrade is a strong endorsement of the Kingdom’s ongoing economic transformation and its successful efforts to reduce its reliance on oil revenues.
According to Moody’s report, the upgrade reflects Saudi Arabia’s robust economic diversification, with particular emphasis on the growth of its non-oil sector, which has been a key focus of the government’s long-term development strategies. The agency highlighted the Kingdom’s concerted efforts to diversify its economy, thereby reducing the nation's vulnerability to fluctuations in global oil prices and mitigating the long-term effects of the carbon transition on public finances and economic stability. This progressive shift is expected to continue contributing to the Kingdom’s fiscal resilience, strengthening its credit profile over time.
Moody’s also commended Saudi Arabia’s financial management, underscoring the government’s commitment to prudent fiscal planning. The Kingdom has made significant strides in improving the efficiency of its public spending, with a focus on prioritizing expenditures that support sustainable economic growth. The agency noted that these efforts have been instrumental in enhancing the financial planning process, particularly in terms of maximizing the impact of available fiscal resources. This careful approach has been pivotal in the development of the Kingdom's non-oil economy, enabling the government to diversify its economic base and maintain a strong fiscal position amid global uncertainties.
In its report, Moody’s projected that Saudi Arabia would maintain a relatively stable fiscal deficit, ranging between 2% and 3% of Gross Domestic Product (GDP). This projection is underpinned by the government’s disciplined approach to managing public finances and its ongoing fiscal reforms. Furthermore, Moody’s forecasted that Saudi Arabia’s non-oil private sector GDP is likely to grow by 4% to 5% annually in the coming years, positioning the Kingdom as one of the leading performers in the Gulf Cooperation Council (GCC) region. This expected growth in the non-oil sector is a key indicator of the success of Saudi Arabia’s economic diversification efforts, signaling that the Kingdom is steadily reducing its dependence on oil exports.
The credit rating upgrade marks the latest in a series of improvements in Saudi Arabia’s credit ratings by global agencies. Over the past few years, the Kingdom has consistently demonstrated its commitment to structural reforms and fiscal sustainability, which have played a central role in enhancing its financial outlook. These advancements reflect the tangible results of the government’s Vision 2030 initiative, a comprehensive blueprint for transforming the Kingdom’s economy through diversification, innovation, and investment in key sectors such as tourism, technology, and renewable energy.
The upgrade to Aa3 with a stable outlook further strengthens Saudi Arabia’s position as one of the most resilient and promising economies in the region. Moody’s recognition of the Kingdom’s progress underscores the success of its strategic reforms, which have bolstered investor confidence and enhanced the Kingdom’s global economic standing. As Saudi Arabia continues to implement its ambitious Vision 2030 agenda, this credit rating upgrade serves as a testament to the country’s ongoing transformation, paving the way for sustainable growth, financial stability, and long-term economic prosperity.
This positive credit outlook is expected to have a beneficial impact on Saudi Arabia’s ability to attract foreign investment, with investors increasingly viewing the Kingdom as a stable and reliable market for business and financial opportunities. As Saudi Arabia moves forward with its diversification efforts, the upgrade serves as both a reflection of the progress made and a signal of the country’s promising future on the global economic stage.