MANAMA (Reuters) - Saudi Arabia’s financial deficit this year is manageable despite the low oil prices, and the kingdom’s economic growth rate and financial health will stay strong, Foreign Minister Adel al-Jubeir said at a security conference in Bahrain on Saturday.
“The deficits that the kingdom will be running this year are manageable,” he told reporters.
On Friday Standard & Poors cut its ratings for Saudi Arabia’s long-term foreign and local currency sovereign credit by one notch to ‘A-plus/A-1’, citing a “pronounced negative swing” in the government’s budget balance.
The kingdom’s Finance Ministry, which has drawn down some of its financial assets and closed its annual accounts early to handle a projected record deficit, later described S&P’s decision as reactionary.
“We are on the tail end of a huge infrastructure development program in terms of airports, roads, hospitals, highways, housing and so forth and so there was a lot of spending,” said Jubeir.
But he added that Saudi Arabia and its Gulf neighbors had over the past 12 years of very high oil prices accumulated large financial reserves and that the kingdom’s debt to gross domestic product ratio of 12 percent was lower than any other G20 nation.
“We have no doubt that the growth rates in our economy will continue and the financial health of the kingdom will remain as strong as it has been,” he said.
Reporting By Yara Bayoumy and William Maclean; Writing by Angus McDowall; editing by Susan Thomas