Fitch Lowers Saudi Arabia’s Outlook to Negative on Weakening Balance Sheets; Affirms Rating at A

Fitch Ratings (Fitch) has revised Saudi Arabia’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to Negative from Stable, while affirming the IDR at ‘A’. The revision of Outlook reflects weakening of Saudi Arabia’s fiscal and external balance sheets, exacerbated by the COVID-19 pandemic and plummeting oil prices.

Fitch expects the Saudi budget shortfall to widen to 12.8% of gross domestic product (GDP) from 4.5% in 2019, reflecting a 33% decline in oil revenue, a 5% drop in non-oil revenue, and a 1% increase in spending compared to last year. In addition, net foreign assets are forecast to decline to 60% of GDP by 2022 from around 72% in 2019-2020, due to debt issuance and reserve drawdown...