DUBAI, United Arab Emirates, Feb. 18 (UPI) -- Standard and Poor's said it lowered its sovereign credit rating for Saudi Arabia because of the pressure from the long decline in crude oil prices.
S&P lowered the sovereign rating for Saudi Arabia one notch from A+/A-1 to A-/A-2 because of lower crude oil prices, which the ratings agency said would have a "marked and lasting impact" on the kingdom's financial position.
"We now expect that Saudi Arabia's growth in real per capita gross domestic product will fall below that of peers and project that the annual average increase in the government's debt burden could exceed 7 percent of GDP in 2016-2019," it said.
Riyadh last month said there were some misconceptions about the overall economic backdrop in the oil-rich country, adding any long-term concerns were largely speculative in nature. The Saudi Arabian Monetary Agency said the country's key economic and financial indicators are stable.
For fiscal year 2015, the country reported total revenue for fiscal year 2015 at $162 billion, an estimated 15 percent decline from budgeted revenues. Oil revenues are expected to reach $118 billion, a decline of 23 percent from the previous year.
The government in December said it was setting up a $48.7 billion stimulus package to support projects designated as national priorities because of "excess" volatility in crude oil prices. Saudi Aramco, the world's largest oil company, announced plans to list its shares on the public market for the first time ever as part of a government reform agenda that includes privatization of some economic sectors,
S&P said the government revenue for the oil-rich kingdom will fall by about 16 percent. From the perspective of the ratings agency, Riyadh is pegging its budget to oil priced at around $45 per barrel.
Last month, S&P lowered its price assumption by about $20 per barrel through 2019 for Brent crude oil, the global benchmark price.
"We now assume $40 per barrel in 2016," the ratings agency said.