Fitch Affirms Saudi Arabia’s Credit Rating at A+

Fitch Ratings affirmed Saudi Arabia’s long-term foreign-currency credit rating at A+ with a stable outlook, pointing to the Kingdom’s strong fiscal and external positions, alongside sustained momentum in social and economic reforms under Vision 2030.

In its report released on Friday, Fitch said the rating reflects Saudi Arabia’s “very strong” government debt metrics and sovereign net foreign asset position, both of which remain significantly stronger than the medians for countries rated in the A and AA categories. The agency highlighted the Kingdom’s substantial fiscal buffers, including public-sector deposits and other financial assets, as a key source of credit strength.

Fitch expects Saudi Arabia’s foreign exchange reserves to cover around 11.6 months of current external payments by 2026, a level that far exceeds the peer median of 1.9 months. While the agency anticipates a gradual decline in net sovereign foreign assets due to increased borrowing, it stressed that these assets will remain a clear credit strength, estimated at 41.2% of GDP by the end of 2026, compared with a peer average of just 3.6%.

The agency noted that heavier external borrowing could shift Saudi Arabia into a modest net external debtor position by 2027, broadly in line with peer countries, without undermining overall credit fundamentals.

Saudi Arabia plans to raise 217 billion riyals in debt this year to cover a projected budget deficit of around 165 billion riyals, in addition to repaying 52 billion riyals in debt principal, according to the National Debt Management Center. The Kingdom has been an active issuer in global debt markets, raising nearly $20 billion in dollar- and euro-denominated bonds last year, making it one of the largest emerging-market issuers amid lower oil prices and wider fiscal deficits.

Fitch expects Saudi Arabia’s fiscal deficit to narrow to 3.6% of GDP by 2027, down from an estimated 5% in 2025, as higher oil revenues and resilient non-oil income help offset spending pressures. While oil prices are expected to remain lower, the agency said increased production should compensate for the price impact, alongside continued strength in non-oil revenues driven by robust economic activity.

Saudi policymakers have repeatedly argued that borrowing to finance investment is less costly than cutting spending that supports long-term growth. Finance Minister Mohammed Al-Jadaan has previously said that the return on government spending between 2025 and 2028 is expected to exceed the cost of debt, emphasizing that Saudi Arabia’s public debt remains among the lowest in the G20.

Fitch underlined that wide-ranging social and economic reforms under Vision 2030 continue to support diversification away from oil, albeit at a tangible cost to the budget. The agency said reform momentum remains strong, pointing to recent measures such as a new investment law and greater openness of the real estate and equity markets to foreign investors.

Saudi authorities have approved opening the stock market to all categories of foreign investors from February, allowing direct investment in listed shares to broaden the investor base and enhance market liquidity. The Kingdom is also moving forward with reforms that will allow foreigners to own a broad range of real estate assets, including residential, commercial, agricultural, and industrial properties, as well as land for development.

However, Fitch cautioned that the resilience of non-oil growth will be “tested” during periods of reduced government and state-linked spending.

Fitch forecasts Saudi Arabia’s economy to grow by 4.8% in 2026, up from an estimated 4.6% in 2025, supported by higher oil output linked to OPEC+ production increases and healthy non-oil sector prospects. The agency cited strong government and quasi-government spending, new projects coming online, and solid consumer demand as key drivers of non-oil growth.

At the same time, Fitch flagged potential challenges, including the recalibration of ongoing projects, lower government capital spending, and tighter liquidity conditions, which could weigh on non-oil activity.

The International Monetary Fund recently raised its growth forecasts for Saudi Arabia for the second time in three months, projecting expansion of around 4% in both 2025 and 2026, driven by non-oil sector growth and a gradual easing of oil production cuts.