Fitch Ratings has affirmed Saudi Arabia's long-term local and foreign currency Issuer Default Ratings (IDR) at ‘AA-', with stable outlooks. The country ceiling is affirmed at ‘AA' and the short-term foreign currency IDR at ‘F1+'.
"Recent royal decrees in the wake of regional political unrest will increase spending, but this will not endanger Saudi Arabia's strong fiscal position and balance sheet, which underpin the ratings," says Charles Seville, Director in Fitch's sovereign team. "Moreover, while Saudi Arabia shares some features with those Mena [Middle East and North Africa] countries which have recently suffered unrest, there are also major differences, notably the government's ability to alleviate socio-economic problems from increasing oil revenues."
The total value of commitments under the two separate packages of decrees was up to 450 billion Saudi riyals (Dh440.56 billion, or 25 per cent of 2011 forecast GDP), but most of the spending will be spread over several years. Spending could rise by 30 per cent this year, driven in part by one-off items, but the government would still run a surplus of 7 per cent of GDP.
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