When Fitch cut Saudi Arabia’s credit rating on Tuesday, it cited the usual concerns: low oil prices and a widening government deficit.
That’s not terribly surprising — the world’s largest oil exporter has endured a slew of downgrades from ratings agencies in recent months.
But the Fitch analysis went beyond oil prices, including warnings tied to political uncertainty within the kingdom, and rising tensions in its volatile neighbourhood.
The credit ratings agency said that policymaking in the kingdom has been concentrated in the hands of Prince Mohamed bin Salman, who is the country’s defense minister and second in line to the throne.
That’s good because it has accelerated decision making. At the same time, Fitch said it has made policy less predictable.
Earlier this month, the deputy crown prince outlined bold plans to build a mega $2 trillion investment fund to help wean his country off its heavy reliance on oil. But Fitch said that it’s not clear whether the deputy crown prince has built a consensus around his initiatives.
“The degree of support for this accumulation of power from other parts of the royal family is uncertain,” Fitch said.