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Standard & Poor’s Ratings Services lowered Friday Saudi Arabia’s long-term foreign currency sovereign credit rating to A+ from AA-, citing a widening budget deficit resulting from weaker oil prices.
The ratings agency projected the country’s fiscal shortfall will jump to 16% of gross domestic product this year from 1.5% in 2014.
S&P said it expects Saudi Arabia to draw down its fiscal assets and issue debt to finance its deficit, though the country does not have much monetary-policy flexibility given the riyal’s peg to the U.S. dollar.
“The outlook remains negative, reflecting the challenge of reversing the marked deterioration in Saudi Arabia’s fiscal balance,” said S&P.
Source: MarketWatch