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Sun 8 Nov 2015 03:21 PM

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“S&P should have done its homework,” says Saudi economist

Experts accuse agency of not paying enough attention to various economic fundamentals in downgrading the kingdom's credi rating

“S&P should have done its homework,” says Saudi economist

Prominent Saudi economists have discredited the recent Standard and Poor’s downgrade of the kingdom’s credit rating as not paying enough attention to various economic fundamentals.

Speaking at a business dialogue themed ‘S&P Evaluation of KSA Economy: Is It Backed by Reality?’, a number of Saudi economists told local media that Standard and Poor’s Rating Agency depended on temporary and unsustainable factors when it downgraded the kingdom’s credit rating.

Sami A. Al Nwaisir, chairman of Al Sami Holding Group, added the Saudi economy had grown strongly in the last five years and was set for further healthy performance despite the grim global economic outlook and the decline in oil prices.

Fahad Alturki, chief economist and head of research, Jadwa Investment, pointed out that the latest rating assessment by S&P is focused more on the decline in oil prices and its implication on the fiscal account over the coming few years while less attention has been paid to other economic fundamentals.

Similar views were expressed by other economic experts based in the kingdom, with Basil Al-Ghalayini, CEO of BMG Financial Group, questioning the credibility of these rating agencies, especially after their misleading performance in the subprime crisis.

“S&P should have done its homework before coming up with these premature conclusions,” he said.

The move by S&P to downgrad Saudi Arabia's sovereign debt feeds into investor concern about the long-term direction of Saudi finances in an era of cheap oil, and about the fiscal tightening that Riyadh may have to conduct to get its budget deficit under control.