Saudi Gazette report
RIYADH — Saudi Arabia is on track to maintain a non-oil sector growth rate ranging between 4.5 percent and 5.5 percent annually over the next five to ten years, according to a report of the Moody’s credit rating agency.
At the same time, Moody’s warned of the rapid expansion of lending and the insurance sector, which could pose challenges for managing banks and insurance companies. The agency expects the government to continue spending related to Vision 2030 projects, with government debt likely to rise to approximately 36 percent of GDP, compared to approximately 26 percent by the end of 2024.
Moody's noted that while the Public Investment Fund played a key role in the initial phases through massive investments, a gradual shift toward increased private sector participation and expanded public-private partnerships will help enhance sustainability and maintain the Kingdom's creditworthiness. “The continued expansion of the non-oil economy in Saudi Arabia, within the framework of Vision 2030, has led to an increase in demand for credit that exceeds the growth in domestic deposits at banks,” the agency said while confirming that Saudi banks have begun diversifying their funding sources, to include, in addition to domestic deposits, capital market issuances and syndicated loans. “This requires careful management of the risks associated with these new funding sources,” the agency pointed out.
The report indicated that with the increased reliance on foreign funding sources, the Saudi Central Bank (SAMA) will create an additional one percent capital buffer over the next year to address the risks of market volatility. Moody’s emphasized that these achievements are a direct reflection of the state's policies to build a sustainable development sector that balances efficiency and fairness, and achieves integration between economic and social development, enhancing quality of life and consolidating the Kingdom's leadership in managing human protection and empowerment systems at the regional and international levels.
