The international rating agency Moody's downgraded Saudi Arabia’s credit rating from Aa3 to A1 with a stable outlook.
“A combination of lower growth, higher debt and smaller domestic and external buffers leaves the kingdom less well positioned to weather future shocks,” the rating agency said.
At the same time, Moody's believes that the 'Vision 2030' programme could help revive the kingdom’s credit profile, but added that “the plans are at an early stage of development and their impact remains uncertain”.
Moody’s predicted Saudi’s nominal gross domestic product would fall 5% this year due to the effects of the oil price slump, only returning to pre-shock levels by 2019. The Saudi government is therefore likely to raise $324 billion — equivalent to 50% of nominal GDP in 2015 — for the cumulative financing of a forecast average deficit of 9.5% of GDP between 2016-1920, the Financial Times reports.
The fall in world oil prices led to a lowering of rating agencies of others oil producers. Thus, Oman's long-term credit rating was lowered from A3 to Baa1 and Bahrain's rating was lowered from Ba2 to Ba1 with a stable outlook.
