Dubai – Standard and Poor's (S&P) has upgraded Saudi Arabia's credit rating, citing the Kingdom's progress in diversifying its economy away from oil and towards services and future technologies. The agency raised the rating to the third-highest creditworthiness level, a notable improvement from its previous A rating, accompanied by a "stable" outlook.
S&P analysts highlighted the Kingdom's efforts to streamline its ambitious Vision 2030 program, including the scaling back of megaprojects like the planned $500 billion Neom city. This adjustment, according to Finance Minister Mohamed Al-Jadan, prioritizes "factories and jobs for Saudis," aligning with the Kingdom's focus on domestic economic development.
"We forecast strong credit growth of around 10%, driven primarily by corporate loans for Vision 2030 projects," stated Zahabia Gupta, a credit analyst at S&P Global in Dubai. Projects such as the King Salman International Airport, slated to become a global aviation hub by 2050, exemplify this growth.
Despite the positive rating and abundant petrodollars, however, a sense of caution prevails among foreign companies operating in Saudi Arabia. Concerns over payment practices are increasingly surfacing, casting a shadow over the Kingdom's economic transformation.
The Riyadh Metro, a recent showcase project, highlights these issues. Built in collaboration with international firms like Bechtel Group and Salini Impregilo, the consortium reportedly faced prolonged delays in receiving billions in outstanding payments.
"Payment default is widespread in Saudi Arabia," warns credit insurer Allianz Trade. "In practice, there are no legal regulations for late payments, and default interest is prohibited." The firm also notes the weak codification of insolvency law, adding to the financial uncertainties.
Foreign companies are now quietly pushing for more transparent payment terms and improved payment practices, seeking to ensure that the Kingdom's economic ambitions are supported by reliable financial frameworks.
While Saudi Arabia's economic reforms are earning recognition from international rating agencies, addressing these payment concerns will be crucial to maintaining investor confidence and ensuring the long-term success of Vision 2030.
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