October 31, 2015 0
S & P lowered its credit rating institution's sovereign long-term Saudi Arabia's foreign and local currencies to A + / A-1 from AA- / A-1 + As she put down to "a clear negative shift" in the public finances of the Kingdom of the balance.
The S & P said it expects to increase the fiscal deficit to Saudi Arabia to 16 percent of gross domestic product in 2015 from 1.5 percent in 2014, reflecting the sharp drop in crude oil prices.
It said in a statement "heavy reliance on hydrocarbon revenues and spending for the current lack of flexibility refers to the weaknesses in the public finances Arabia."
After years witnessed a continuous growth in government spending supported by high oil prices, Saudi Arabia's economy may face a more difficult period.
Many analysts predict that growth will slow in 2016 from its current rate of about three percent.
The Saudi central bank to liquidate assets to cover the huge deficit in the state budget as a result of lower oil prices.
However, the pace of decline in net foreign assets slowed to Saudi Arabia earlier this year, partly due to the resumption of the issuance of local government bonds in July, the first time since 2007, which reduced the need to sell assets abroad.
And we may see the pace of decline further slowdown in the coming months with the government to take austerity steps to curb spending and increase revenues from non-oil sources.
The International Monetary Fund warned last week that the UK financial reserves will be exhausted in less than five years if fiscal policy remained unchanged.
And it kept the Standard & Poor's negative outlook about the Kingdom
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