Fitch outlook moves from negative to stable. The recent downgrade to the Sovereign rating we understand was based upon a quantitative, number-driven analysis and was anticipated.

 

2016 projected revenues ahead of estimate. SAR528bn of which SAR199bn was non-oil representing 38% of total revenues.

  

2016 saw the launch of Vision 2030 and the National Transformation Program (NTP), which amongst many other initiatives commits to reaching a balanced budget by 2020.

 

The government has also increased its’ funding flexibility by successfully tapping external markets for the first time and opening up local capital markets to foreign investors. The Kingdom’s oil policy has borne fruit, resulting in a more stable global oil price environment.  In the meantime, the Saudi economy has structurally aligned itself to a lower oil price environment as reflected in a more sustainable balancing price for its’ fiscal and current accounts.

 

Commenting on the situation H.E. Mohammed Al-Jadaan, Minister of Finance said “The fundamentals of the Saudi economy remain strong. The Kingdom’s balance sheet remains strong with SAMA’s FX assets estimated at 84% of GDP – the third largest in GDP terms globally. General government assets are considerably above 100% of GDP.  

Through Vision 2030 a number of concrete structural measures have already been rolled out, with the twin goals of decreasing the Kingdom’s fiscal dependence on hydrocarbons and encouraging economic diversification. The government has also made progress in enhancing efficiency by reigning in overspending and optimizing expenditure. 

These efforts have been made possible through strengthened governance, institutionalization of structural reforms, and enhanced transparency.”