Standard & Poor’s cuts Saudi Arabia’s credit rating
by ChemOrbis Editorial Team - content@chemorbis.com
According to media reports, Standard & Poor’s (S&P) cut Saudi Arabia’s credit rating one level to A+, the fifth-highest classification, from AA- , asserting that lower crude oil prices will widen Saudi Arabia’s budget deficit. Energy exports constitute 80% of Saudi Arabia’s revenue, according to Bloomberg.
S&P reported in a statement that because of the decline in crude oil prices, Saudi Arabia’s budget deficit will account for 16% of the country’s 2015 gross domestic product (GDP) while S&P said that the country’s credit outlook is negative.
A credit analyst from S&P reported that the credit agency may cut its ratings further within the next two years if Saudi Arabia does not achieve a sizable and sustained reduction in the general government deficit or if its liquid fiscal financial assets fell below 100 percent of GDP.
For 2016, 2017 and 2018, however, S&P expects a gradual decline in Saudi Arabia’s general government deficit. According to S&P, the country’s government deficit will decrease to 10% in 2016, 8% in 2017 and 5% in 2018.
S&P reported in a statement that because of the decline in crude oil prices, Saudi Arabia’s budget deficit will account for 16% of the country’s 2015 gross domestic product (GDP) while S&P said that the country’s credit outlook is negative.
A credit analyst from S&P reported that the credit agency may cut its ratings further within the next two years if Saudi Arabia does not achieve a sizable and sustained reduction in the general government deficit or if its liquid fiscal financial assets fell below 100 percent of GDP.
For 2016, 2017 and 2018, however, S&P expects a gradual decline in Saudi Arabia’s general government deficit. According to S&P, the country’s government deficit will decrease to 10% in 2016, 8% in 2017 and 5% in 2018.
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