Moody’s released an updated Credit Opinion on September 19th and took no rating action on the rating which remains at the A1 level with a stable outlook.
According to the Agency, risks to the credit profile remained broadly balanced.
The report reinforces Saudi Arabia’s resiliency to shocks and the economy’s durability to geopolitical conditions in the region. Moody’s highlights the Kingdom’s ability to quickly respond to the incidents which resulted in only a temporary disruption hence reassuring the Agency that the attack on oil facilities should not have a long-lasting impact on the government’s credit profile. Additionally, the report remarks that the Kingdom has access to ample financial reserves (and strategic crude oil reserves) to buffer a temporary decline in oil production and mitigate a temporary loss in fiscal revenues or export proceeds. According to Moody’s, at USD503bn (as of July 2019), FX reserves at the Saudi Arabian Monetary Authority – a third of which are comprised of government deposits – provide a sufficient cushion to front shocks or finance fiscal deficits if needed.
In the report, Moody’s acknowledges the implementation of wide-ranging reforms, within the framework of the Vision 2030.
The Ministry of Finance remains committed to the reform program, which will further enhance resiliency of the economy and is starting to bear fruit. To this end, real GDP growth rates in Q1 of 2019 were around 1.7% compared to 1.4% in Q1 of 2018. In addition, the real growth rate of non-oil sector was 2.1%, driven by the growth of the private sector by 2.3% compared to 1.7% in the same quarter last year.
The Ministry of Finance praised the professionalism of Saudi Aramco in dealing with the terrorist attack on its two plants in Khurais and Abqaiq on September 14 this year; where precise contingency plans contributed to the rapid recovery of oil supplies. Moreover, the Kingdom of Saudi Arabia proved its ability to continue the supply of oil markets in less than 48 hours from the attack on the two oil plants, which reinforces its institutional capacity and shock response readiness. Saudi Aramco also confirmed that it is the most reliable company in the world.
Source: The Ministry of Finance Saudi Arabia
