Fitch Ratings lowered the outlook on Saudi Arabia’s sovereign ratings to ‘negative’ from ‘stable’ citing fiscal deterioration.
According to S&P, fiscal shocks are forecast to deteriorate fiscal position of the economy. Lower oil prices and increased spending associated with the accession of a new king are forecast to widen the general government deficit this year.
The agency cautioned that deficits would stay in double digits if there was no consolidation. Transparency on fiscal policy and outturns is a weakness relative to rating peers. Further, deficit financing is forecast to erode substantial buffers.
Nonetheless, the agency affirmed the ratings at ‘AA’. Fitch said the appointment of a Crown Prince from the third generation of the royal family should end uncertainty on the line of succession for a prolonged period.
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