Fitch Affirms Saudi Arabia at A+ With a Stable Outlook, Citing Resilient Public Finances Through the Hormuz Disruption
Fitch Ratings affirmed Saudi Arabia’s long-term foreign-currency issuer default rating at A+ with a stable outlook late on Friday, saying the kingdom’s fiscal and external balance sheets have held up through the regional conflict, with government debt and sovereign net foreign assets considerably stronger than the medians of both A and AA rated peers and sizeable government deposits providing a further buffer.
Geopolitical risk is high, the agency said, but the economy and public finances have proved resilient through the conflict. Fitch forecasts real GDP growth slowing to 0.6 percent in 2026 on the disruption to trade from the closure of the Strait of Hormuz, rebounding in 2027 as flows normalise and allow higher oil and petrochemicals production, then easing to 2.9 percent in 2028. Flows through the East-West pipeline supported oil production during the conflict, the agency noted, and it expects output to be ramped up after the reopening of the Strait to meet external demand and rebuild domestic stocks. The phased opening of gigaprojects, the proximity of key events and guidance that the Public Investment Fund will keep domestic spending largely unchanged in its new five-year plan support the non-oil economy.
The fiscal arithmetic cuts in stages. Fitch projects the deficit narrowing in 2026 because higher oil prices offset lower export volumes, even as spending rises on the war’s impact, with much of the first-quarter jump reflecting precautionary frontloading. It then sees the deficit widening to 4.7 percent of GDP in 2027 as oil revenues fall, a path the agency says is consistent with a fiscal breakeven oil price of 94 dollars a barrel. Fitch assumes Brent averages 87 dollars a barrel in 2026 and expects the reopening of the Strait to return the oil market to oversupply, pulling the price down to an average of 60 dollars by 2028, leaving the breakeven 7 dollars above the agency’s 2026 price assumption and 34 dollars above its 2028 assumption, our calculation.
Government debt is projected to rise from 31.8 percent of GDP at end-2025 to 41.3 percent at end-2028, a 9.5 percentage point increase that would still leave the ratio 16.8 points below the 58.1 percent projected median for A rated peers, our calculation. Foreign reserves hold broadly stable at about 11.6 months of current external payments in 2026, well above the peer median, and Fitch sees a small current account surplus in 2026 on higher oil export revenues before the balance returns to a deficit of about 5 percent of GDP by 2028. On the risk side, the agency flags that a severe deterioration in regional security that disrupts the kingdom’s ability to export oil could pressure the rating.
Why it matters: This is an endorsement at a telling moment: the largest Arab economy keeps its A+ standing with a stable outlook through a quarter in which its export artery was disrupted. The affirmation is consistent with the picture in the kingdom’s own data, where reserve assets rose 8.1 percent in the year to June, as we covered this week, and with S&P’s parallel assessment of resilient Gulf banking systems. The gap between the 94 dollar breakeven and Fitch’s sliding Brent assumptions also frames the medium-term fiscal question the whole region faces once the security premium fades: the same reopening that restores volumes brings back the revenue squeeze.
Outlook: Fitch’s numbers make the strait the swing variable in both directions: reopening drives the 2027 rebound and the oil-price slide, while renewed disruption is the named downgrade trigger. With Fitch’s Rating Watch Negative still in place on Qatar and Ras Al Khaimah, Saudi Arabia’s stable outlook sets the benchmark for how the agency is differentiating Gulf sovereigns by their buffers.
Table – Fitch on Saudi Arabia, key numbers:
| Item | Fitch view |
|---|---|
| Rating | A+, stable outlook |
| Real GDP growth 2026 | 0.6% |
| Growth 2028 | 2.9% |
| Fiscal deficit 2027 | 4.7% of GDP |
| Fiscal breakeven oil price | $94/b |
| Brent assumption | $87/b 2026, $60/b 2028 |
| Government debt/GDP | 31.8% end-2025 to 41.3% end-2028 |
| A-peer debt median | 58.1% |
| Reserves | ~11.6 months of external payments |
| Current account | Small surplus 2026, ~-5% of GDP 2028 |
Sources: Fitch Ratings.
