(Bloomberg) --
Fitch Ratings reaffirmed Saudi Arabia's A sovereign rating and revised its outlook for the kingdom from negative to stable as higher oil prices give the world's largest crude exporter a boost.
The ratings agency expects the Saudi budget deficit to narrow to 3.3% of gross domestic product this year -- better than the 4.9% targeted in the state budget, it said in a report on Thursday. It attributed its revision to “significantly higher oil prices and continued government commitment to fiscal consolidation,” and said it expected the central bank's reserves to increase in 2022 and 2023 as the current account returns to surplus.
“Higher oil prices in 2021 are nonetheless a test for reform momentum, including on the wage bill and subsidies,” the agency said. “Planned reforms in these areas may well slow.”
Saudi Arabia Eases Subsidy Cuts With Gasoline Price Ceiling
Fitch also forecast a rise in the government debt to GDP ratio to 35% by the end of 2023. Constraints on the kingdom's rating include “oil dependence, weak governance indicators and vulnerabilities to geopolitical shocks,” the report said.
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