The credit rating agency, "Moody's", confirmed in its credit report to the Kingdom of Saudi Arabia its rating at "A1", with a revised outlook from negative to stable compared to its report published in June 2021.

The agency expected the Saudi economy to return to positive growth in 2021, with the public finance deficit shrinking in 2021, accompanied by a decrease in the level of debt in the medium term, praising the Kingdom's consistency in its fiscal policies regardless of the rise and fall in oil prices.

The stable outlook indicates that in addition to the economic recovery resulting from the exit from the (Covid-19) pandemic, and the improvement in oil prices, the financial position and net external assets remain strong enough to support the credit rating.

The agency also indicated that one of the main pillars of the adjustment in the outlook is the government's commitment to fiscal reforms in the medium term, including the fiscal sustainability program, which aims to strengthen fiscal discipline, improve the effectiveness of public financial management, and support the rebuilding of reserves as one of the pillars of the fiscal rules.

During the period 2015-2020, the program contributed to the growth of non-oil revenues by more than 18% compared to 10% in 2015. It also reduced primary expenditures, which do not include debt service, from 56% to 53% in 2020.

The agency expected a decrease in the size of the public debt as a percentage of GDP for the year 2021 AD to below 29%, to reach about 25% by the year 2025 AD, from 32.5% during the year 2020. The agency also estimated that the volume of public debt as a percentage of GDP in the coming years ranges between 25% and 30%, which is better than its expectations for comparable countries with a similar credit rating, which ranges between 35% and 40%.

In terms of public finances, Moody's estimated in its current report that the budget deficit for the fiscal year 2021 will reach (2.5%) compared to (11.2%) during the year 2020, and that expenditures will decrease during the current and next year by 6% in 2021 and 6% in 2022 AD.

The agency noted the strength of the Kingdom of Saudi Arabia in the oil markets for being one of the few exporting countries that are able to produce oil at the lowest costs in the world, which will support its economic resilience even in light of low oil prices.

The agency also praised the capital spending of the Public Investment Fund towards major projects, which aims to range from 4 to 5% of GDP in the coming years, which in turn will support economic diversification and job creation away from oil price fluctuations.