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S&P raises Saudi Arabia’s rating due to its sustained economic shift away oil

S&P raises Saudi Arabia’s rating due to its sustained economic shift away oil

S&P, a global ratings agency, raised Saudi Arabia's credit rating from 'A to 'A+ with a stable outlook' on Friday. This was based on the ongoing social-economic transformation of the country.

Fitch stated that the Vision 2030 project of the country provides flexibility in managing capital spending and debt issuance.

This report stated that the sustained momentum of this project could help boost activity in the construction, manufacturing, and mining sectors to spur GDP growth between 2025-2028.

The ratings agency said earlier this week that it expected the Saudi government to reduce capex, and current spending associated with them in 2025.

Fitch stated that Saudi Arabia is aiming to diversify their economy and move away from its dependence on hydrocarbons. The current investments will boost the consumption of Saudi Arabia's youth population, as well as increase the productivity capacity of the country.

Saudi Arabia's Public Investment Fund signed last week a new Memorandum of Understanding worth $3 billion with Italy’s state export credit agency SACE. Rating agency SACE said that this would help maintain the debt of the country.

Fitch expects the current oil price sensitivity will continue to erode fiscal and external balances until 2028.

The Saudi giant Aramco is expected to further reduce oil revenues due to its declining dividend.

(source: Reuters)