Moody's raises Saudi Arabia's credit rating amid improved policy predictability
Date
5/26/2024 8:40:56 AM
(MENAFN) Moody's Investors Service has raised Saudi Arabia's credit rating in both local and foreign currencies to Aa1 from Aa2, citing a heightened predictability of government policies and decision-making processes that impact the private sector. The upgrade underscores Saudi Arabia's commitment to fostering non-oil economic growth, with a particular focus on stimulating investment in tourism and bolstering the private sector. The kingdom, being the world's largest exporter of crude oil, recognizes the imperative of diversifying its Economy away from oil dependence, and has thus accelerated policies aimed at achieving this objective.
In a statement reported by Reuters, Moody's highlighted the "increasing predictability of policies and decision-making processes affecting non-governmental issuers in light of institutional improvements." The agency also noted the central bank's robust foreign exchange reserves, which support the "zero gap" between the foreign and local currency denominations, indicating minimal conversion and convertibility risks.
However, Moody's cautioned against over-reliance on oil revenues, which poses a challenge for both the private and government sectors. Additionally, the agency attributed the "three-notch gap" between the local currency credit rating and the sovereign rating of "A1" to challenging regional geopolitical factors. Despite these considerations, Moody's upgrade reflects confidence in Saudi Arabia's efforts to enhance economic resilience and mitigate risks associated with oil dependence.
Earlier in March, Standard & Poor's affirmed Saudi Arabia's sovereign rating and future outlook, highlighting the country's commitment to social and economic reforms as key drivers for improving its prospects. The recent credit rating upgrades underscore Saudi Arabia's progress in implementing structural reforms aimed at diversifying its economy and fostering sustainable growth.
MENAFN26052024000045015682ID1108258580
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.