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S&P Affirms Saudi Ratings to ‘Aa-/A-1+’

DUBAI — Standard & Poor’s Ratings Services on Friday said it had affirmed its ‘AA-’ long-term and ‘A-1+’ short-term foreign and local currency sovereign credit ratings on the Kingdom of 
Saudi Arabia.

The outlook is stable.

In a statement on Friday, the rating agency said, the transfer and convertibility assessment on Saudi Arabia remains ‘AA+’.

“The ratings on Saudi Arabia reflect our view of the government’s extremely robust external and fiscal positions,” Standard & Poor’s credit analyst Farouk Soussa said.

“Saudi Arabia currently enjoys an exceptional amount of fiscal flexibility to allow it largely to shield the local economy from the full impact of the global recession, primarily through the pursuit of expansionary fiscal policy.”

The stable outlook reflects Saudi Arabia’s exceptionally strong balance sheet and the government’s success with its ambitious and broad-based reform effort on the one hand, and high regional geopolitical risks on the other.

The ratings are likely to be raised if regional geopolitical risks abate or if progress is made in addressing social issues, particularly unemployment.

Driven by high oil receipts over the past few years and the cautious approach of the Saudi Arabian Monetary Agency, or SAMA, towards foreign reserves management, foreign reserves and liquid foreign assets managed by SAMA stood at $438 billion at year-end 2008 (up from $136 billion in 2004), which is sufficient to cover about 24 months of current account payments (including private transfers).

business@khaleejtimes.com