S&P Rating agency has lowered the outlook for Saudi Arabia to negative at the back of sliding oil prices. The country is the world’s top oil exporter.
The agency maintained its sovereign credit rating for the kingdom due to the country’s very solid fiscal condition and despite the substantial deficit planned. S&P also stated that “… given its high dependence on oil, Saudi Arabia’s currently very strong fiscal position could weaken owing to the oil price decline”… “The negative outlook reflects our view that Saudi Arabia’s general government fiscal position is weakening”.
The agency has also lowered its projections for world oil prices. “We now assume an average Brent oil price of $55 a barrel in 2015 and $70 a barrel in 2015-2018,” S&P spokesman said.
On the other hand United Arab Emirates expects to balance its budget this year. Therefore S&P maintained its “AA/A-1+” ratings and stable outlook. However, it anticipates structural and institutional weaknesses to remain.
World oil prices lost more than 50 percent in 2014 and the recent surge could be simply a “head-fake”. Oil as cheap as $20 a barrel could be around the corner in 2015, according to report from Citigroup that was released on Monday [Oil Plunge To $20 Could Be On The Horizon, Citigroup Warns].
The International Monetary Fund estimated last month that the Gulf countries would suffer $300 billion in lost revenues this year because of the price slump.
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