Time: March 31, 2019
LONDON: Saudi Arabia’s expansionary budget is expected to boost economic growth in the Kingdom, according to S&P Global Ratings.
The ratings agency said it expects Saudi Arabia to reduce budgeted expenditure to achieve its goal of a balanced budget by 2023.
“Fiscal reforms are yielding results, with 2018 non-oil revenues increasing by approximately
35 percent over 2017,” S&P said in a report. “That said, we expect that any material economic benefit from the overall reform package will likely only materialize beyond our ratings horizon.”
S&P affirmed the Kingdom’s existing “A-/A-2” sovereign rating with a stable outlook.
We continue to anticipate that public investment will increase under a four-year stimulus plan …
It expects the central government deficit to average close to 7.5 percent of GDP over 2019 to 2022. A sustained oil rally could also benefit the country’s overall budgetary position.
“We note the government’s over-compliance with OPEC production cuts, which aim to boost oil prices. If oil prices increase, this could quickly improve Saudi’s fiscal position, as it did in 2018,” S&P said.
“We continue to anticipate that public investment will increase under a four-year stimulus plan whose goal is to stabilize private-sector demand.”