Fitch Ratings affirmed Saudi Arabia’s A+ sovereign credit rating with a stable outlook, pointing to strong fiscal and external balance sheets and deep net foreign assets, it said in a note on Friday.

The big picture

Fitch expects Saudi Arabia to shift to a small net external debtor position by 2027, mainly due to large external borrowing across the economy. This transition comes as oil prices are forecast to ease to around USD 63 a barrel by 2026, tightening the external backdrop even as investment activity accelerates.

The safety net is still huge: Foreign reserves are expected to stay well above peers, covering an estimated 11.6 months of external payments by 2026, compared to a peer median of less than two months. Sovereign net foreign assets are forecast to decline as borrowing increases, but will remain a key strength, standing at 41.2% of GDP by end-2026.

Growth vs. deficit

Economic growth is forecast at 4.8% in 2026, driven mainly by higher oil output, before easing in 2027. The banking sector remains solid, with capital adequacy at around 20% and non-performing loans at a record low of 1.1%, even as credit growth continues to outpace deposit growth.

The agency expects the current account deficit to widen to 4.3% of GDP in 2026, up from an estimated 3% in 2025, driven by higher imports linked to domestic spending. The deficit should narrow slightly in 2027 as oil export volumes rise, new export facilities come online, and tourism inflows increase, while import growth slows as project-related spending eases.

On the fiscal side, Fitch expects the budget deficit to narrow to 3.6% of GDP by 2027, remaining well below peer levels. Fitch noted that the government retains flexibility through project recalibration at the sovereign and government-related entity levels if revenues fall short. Meanwhile, borrowing by state-linked entities is expected to moderate following a period of rapid growth from a low base.

Why it matters

The era of the “capital-rich” Saudi transition is evolving into a leveraged transition. The Kingdom’s fiscal health is no longer ensured by a massive pile of idle liquidity. Instead, resilience now depends entirely on the return on investment of megaprojects.

Tags: