KSA’s huge oil reserves secure economic status

03 Nov 2015

(MENAFN) Saudi Arabia’s vast hydrocarbon resources, high per capita income, and strong but deteriorating fiscal position are heavily supporting foreign and local-currency government bond ratings.

As a logical result, this paved the way for the kingdom to shape a sizable asset cushion and gradually reduce its debt ratios to levels much lower than rating peers, based on recent reports.

However, the weakness side to the stable outlook relates to the economy’s exposure to commodity cycles and price shocks, thus a longer period of low oil prices, would have a negative impact on Saudi Arabia’s credit profile.

Moreover, if oil prices continue at their current, relatively low level over the medium term and the government does nothing about it, the weakening of its finances would affect assessment of fiscal strength.

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