Fitch said the kingdom’s sizeable fiscal buffers, including government deposits and other public-sector assets, continue to support the kingdom's credit profile, although dependence on oil and governance indicators remain relative weaknesses.
The ratings agency said Saudi Arabia's economy and public finances had proved resilient despite the recent US-Iran conflict. While a ceasefire and the reopening of the Strait of Hormuz have eased immediate risks, Fitch said renewed tensions over Iran's nuclear programme could trigger further military action and remain a key source of geopolitical uncertainty.
Fitch expects Brent crude prices to average $60 a barrel in 2028, down from $87 in 2026, as oil markets return to oversupply following the reopening of the Strait of Hormuz.
The agency forecasts Saudi Arabia's economy to grow 0.6% in 2026, reflecting disruptions to trade during the temporary closure of the Strait, before rebounding in 2027 as oil exports and petrochemical production recover.
Growth is expected to moderate to 2.9% in 2028, supported by the phased rollout of giga-projects and continued domestic investment by the Public Investment Fund, partly offset by lower government capital spending and slower credit growth.
Fitch expects the fiscal deficit to narrow in 2026 as higher oil prices offset lower production volumes, before widening to 4.7% of GDP in 2027 as oil prices decline. It said lower capital expenditure and reduced war-related spending should help narrow the deficit again in 2028.
The top ratings agency said the government debt is set to rise to 41.3% of GDP by end-2028, from 31.8% at end-2025, although this remains well below the median for similarly rated sovereigns. Fitch said borrowing by government-related entities would continue to increase but remain manageable.
The agency also expects Saudi Arabia's external position to remain strong, with foreign exchange reserves equivalent to about 11.6 months of current external payments in 2026. Sovereign net foreign assets are forecast to remain a key credit strength despite higher borrowing.
Fitch forecasts a small current account surplus in 2026 on stronger oil export revenues before a return to deficit by 2028 as lower oil prices and robust domestic demand increase imports.
The agency said Saudi banks remain resilient, with non-performing loans at 1.1% and a Tier 1 capital ratio of 19.2% at the end of the first quarter. It maintained a neutral outlook for the banking sector despite a deteriorating regional outlook.
According to Fitch, the rating could come under pressure if public finances weaken materially, government debt continues to rise, or regional security deteriorates significantly enough to disrupt oil exports.
Conversely, stronger fiscal reforms, sustained higher oil prices or continued diversification of the non-oil economy could support a future upgrade, it added.
