The international Credit rating agency ”Moody"s” updated its credit report for Saudi Arabia affirming its A1 rating for the Kingdom. The agency changed the negative outlook in its June 2021 rating to a stable outlook. The agency predicted the Saudi economy will return to positive growth in 2021, and the current account level will return to surplus as the fiscal deficit shrinks in 2021, accompanied by a reduction in the level of debt in the medium term. Moody’s also praised the Kingdom"s fiscal policies effectiveness evidenced by policy responses in periods of both low and high oil prices. A stable outlook suggests that despite to the economic recovery from the pandemic and improved oil prices, the financial position and net external assets of the Kingdom remain strong enough to support its credit rating. The agency also noted that one of the key pillars of the change in its outlook was the Government"s commitment to medium-term fiscal reforms, including fiscal Sustainability Programme which aims to further enhance fiscal discipline, improve effectiveness of public finance management, support the rebuilding of fiscal buffers by adopting fiscal rules and by transitioning to a multi-year budgeting process, which will also better align the forward-looking fiscal framework with national expenditure priorities. The financial sustainability program framework between 2015-2020 contributed to the growth of non-oil revenues from less than 10 percent in 2015 to more than 18 percent in 2020, and the reduction of non-interest expenditures from 56 percent in 2015 to 53 percent in 2020. Moody’s estimates that the volume of public debt as a percentage of GDP for 2021 will fall below 29 percent and estimates that it will reach about 25 percent by 2025 from 32.5 percent in 2020. The agency estimated that the size of public debt to GDP in the coming years would fall between 25 percent and 30 percent, surpassing its estimations for comparable countries with the same credit rating of 35 - 40 percent. The agency expects Saudi Arabia’s fiscal deficit for the fiscal year 2021 to decrease to (2.5%) from (11.2%) during the year 2020, and the expenditures will reduce during this year and next year by around 6 percent in the year 2021 and another 6 percent in the year 2022 on the public finances level. In addition, the agency commented on the Kingdom’s strength in the oil market displayed in its capacity of producing oil at the lowest costs in the world in comparison with other exporting countries. Such advantage supports the Kingdom"s economic resilience in the environment of low oil prices. The agency also praised the government"s ongoing economic diversification efforts and increasing the size and share of the non-oil private sector in the economy, supported by major government projects through local capital expenditures financed through the Public Investment Fund (PIF) targeted at 4-5 percent of GDP annually for the next few years, and reforms particularly in the education field will support economic diversification, in spite of oil price fluctuation, and provide the employment required to keep pace with growing population. — SG