The international rating Agency Moody’s Investors Service lowered the long-term rating of Saudi Arabia to “A1” from “Aa3” due to the effects of falling oil prices on the economy of the country.
The ranking of Oman by the Agency downgraded by one notch to “Baa1”, Bahrain — up to “Ba2”. Moody’s has also assigned a negative Outlook on the ratings of the UAE, Qatar and Kuwait, reports “Finmarket”.
Moody’s expects a further reduction of foreign exchange reserves of oil producing countries against the background of high budget deficits with the slowdown in GDP growth.
In particular, experts predict a decline in the nominal GDP of Saudi Arabia by 5% this year (in 2015, the drop exceeded the 13%) while maintaining the country’s budget deficit at 9.5% of GDP in 2016-2020 that will require financing costs of $324 billion.
Moody’s also indicates that efforts to diversify the economy will help improve the creditworthiness of the country. The rating Outlook for Saudi Arabia is stable.
