Saudi Arabia's credit rating CUT as low oil prices CRUMBLE Middle East nation's economy
SAUDI Arabia's economic woes have worsened after a top rating agency downgraded its credit rating and said plans to save the economy look set to fail.
Saudi Arabia has been hit by falling oil prices
Crumbling state finances amid low oil prices and dubious plans for financial reforms, triggered Fitch to cut the kingdom's rating down from AA- to A+.
In response, the Saudi finance minister Mohammed al-Jadaan insisted the economy and the government's balance sheet was strong.
As one of the world's largest crude oil producers, Saudi Arabia has been hit by a major fall in prices, which went from more than $100 a barrel in 2014 to around $30 last year and remain under $50 today.
The crash, coupled with huge state spending, has seen the Middle Eastern country's budget deficit hit record levels.
Crude oil prices have halved in recent years
The government has drawn up plans to diversify away from its huge reliance on oil, as the days of its monopoly on the market have come to a close with the US shale revolution.
Saudi along with other countries in OPEC a last year agreed to cut production in the hope of raising prices.
But when values go up, America simply ups production, keeping a lid on the value of commodity.
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Saudi's hopes of reforming the economy are a mammoth task, according to Fitch.
In a statement the ratings agency said: "In Fitch's view, the scale of the reform agenda risks overwhelming the government's administrative capacity."
Finance minister Mr al-Jadaan said: "The Saudi economy has structurally aligned itself to a lower oil price environment as reflected in a more sustainable balancing price for its fiscal and current accounts."