Saudi Arabia: Downgrade adds to pressure on economy

Fitch Ratings has cut its sovereign credit rating, citing the kingdom’s “continued deterioration of public and external balance sheets, the significantly wider than expected fiscal deficit in 2016 and continued doubts about the extent to which the government’s ambitious reform programme can be implemented.” As Fitch points out, between June 2016 and January 2017, government deposits declined by SR242bn ($64.5bn) to SR841bn (35% of 2016 GDP), leaving them at around half their August 2014 peak of SR1.6trn. At the same time, general government debt has risen from 4% of GDP in 2015 to 9.7% now.