S&P lifts Saudi Arabia's rating on sustained economic shift away from oil

(Reuters) - Global ratings agency S&P raised Saudi Arabia's rating to 'A+' from 'A' with a stable outlook on Friday, underpinned by the ongoing social and economic transformation in the country.

Fitch said the country's Vision 2030 project provides some flexibility in managing capital expenditure and debt issuance.

The sustained momentum in this project can help boost activity in construction, logistics, manufacturing and mining sectors, prompting GDP growth over 2025-28, the report said.

Earlier this week, the ratings agency had said it expects Saudi government to cut capex and associated current spending in 2025.

With Saudi's main aim to diversify its economy away from its reliance on the hydrocarbon sector, Fitch said the current investments should boost consumption by Saudi Arabia's young population and increase the productive capacity of the economy.

Last week, Saudi Arabia's Public Investment Fund had signed a new memorandum of understanding worth $3 billion with Italy's state export credit agency SACE. The ratings agency said this will help maintain the country's debt.

Fitch also anticipates that current sensitivity to oil prices will weaken fiscal and external imbalances through 2028.

It expects that Saudi's giant Aramco's decline in dividend will further dampen oil revenue.

(Reporting by Sruthi Narasimha Chari in Bengaluru; Editing by Arun Koyyur)