Fitch Affirms Saudi Arabia at ‘A+’, Outlook Stable
Fitch Ratings has affirmed Saudi Arabia’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘A+’ with a stable outlook.
The affirmation of Saudi Arabia’s ratings reflects its strong fiscal and external balance sheets, with government debt/GDP and sovereign net foreign assets (SNFA) considerably stronger than both the ‘A’ and ‘AA’ medians, and significant fiscal buffers in the form of deposits and other public sector assets.
Ratings analysts noted that Saudi Arabia’s oil dependence, World Bank Governance Indicators (WBGI) and vulnerability to geopolitical shocks have improved but remain weaknesses.
The kingdom’s deep and broad social and economic reforms implemented under Vision 2030 are diversifying economic activity, albeit at a meaningful cost to the balance sheets.
Reserves are projected at 11.6 months of current external payments in 2026, well above the peer median of 1.9 months. SNFA will decline due to higher borrowing but will remain a clear credit strength, at 41.2% of GDP at end-2026 against a peer median of 3.6%.
However, large external borrowing across the economy will move the economy to a small net external debtor position in 2027, in line with the peer median (Saudi Arabia had a net external creditor position of 81.6% at end 2016).
Ratings analysts forecast a widening of the current account deficit (CAD) to 4.3% of GDP in 2026 from an estimated 3% in 2025 due to the cost of imported inputs associated with high domestic spending and a small increase in oil export receipts. Fitch forecasts Brent to average USD63/b in 2026 and 2027.
Saudi Arabia’s deficit is projected to narrow slightly in 2027 as revenues benefit from higher oil export volumes, new export facilities coming on stream and higher tourism inflows, supported by slower import growth from lower project spending.
The kingdom’s external borrowing and a further reorientation of public assets to domestic from foreign investments is expected to keep reserves stable.
Fitch projects the fiscal deficit will narrow and reach 3.6% of GDP by 2027 after lower oil revenues and overspending pushed it to an estimated 5% in 2025 . Oil revenues will be up from 2025 as higher production will offset the impact of lower prices.
Non-oil revenues will continue to benefit from buoyant economic activity and improved collection techniques. Ratings analysts assume spending growth will be low, as capex has likely peaked and measures are in place to contain current spending.
Fitch’s fiscal projections are consistent with a further increase in debt/GDP, which is projected at 36% at the end of 2026 based on the authorities’ goal of maintaining deposits around current levels in nominal terms.
An ongoing project recalibration exercise at the sovereign and government-related entity (GRE) level provides an important tool in the event of a shortfall in revenues, the rating note stated.
GRE borrowing should also slow: while it has grown rapidly recently, this was from a very low base, and leverage ratios are low.
Saudi Arabia’s economic growth is projected at 4.8% in 2026, following an estimated 4.6% in 2025. This will be driven by higher oil production, reflecting the OPEC+-related output increases over 2025.Growth will ease in 2027, in line with slower growth in oil production.
Prospects for the non-oil sector remain healthy, underpinned by reform, high levels of government and GRE spending, new projects coming on stream and buoyant consumer spending. However, Fitch anticipates that ongoing project recalibration, lower government capex and tighter liquidity will pose challenges to non-oil growth.
Reform momentum remains strong with recent steps including a new investment law and a greater opening of the real estate and stock markets to foreign investors.
A removal of fees on some expat workers in the industrial sector highlights an understanding of the need to ease near-term bottlenecks. Nonetheless, the resilience of non-oil growth to a period of lower government and GRE spending remains to be tested.
Ratings analysts said core metrics of the banking sector are healthy. Over the first three quarters of 2025 capital adequacy edged up to 20% and non-performing loans fell to an all-time low of 1.1%.
Credit growth and high net interest margins have supported profitability. Credit growth is slowing owing to macroprudential measures, but should remain just above nominal non-oil GDP growth.
Lending growth has continued to outpace deposit growth, resulting in a further deterioration in the sectors’ net foreign asset position. However, this remains relatively small compared to total assets of the banking sector and is in stable forms. Jaiz Bank: Repricing Momentum Signals Market Conviction
