Fitch Ratings has raised Saudi Arabia's long-term foreign-currency default rating due to the kingdom's economic diversification efforts, "formidable" finances and low government debt. The ratings agency upgraded the kingdom's rating to 'A+' from 'A' with a stable outlook, it said in a statement on Wednesday. The investment grade rating highlights the strong capacity of the kingdom to meet its financial commitments. The upgrade reflects the kingdom's "strong fiscal and external balance sheets, with government debt/gross domestic product and sovereign net foreign assets [SNFA] considerably stronger than both the 'A' and 'AA' medians, and significant fiscal buffers in the form of deposits and other public sector assets”, Fitch said. “The upgrade also assumes ongoing commitment to gradual progress with fiscal, economic and governance reforms.” In reference to the kingdom's strong finances, Fitch cited Saudi Arabia's foreign reserves excluding gold which reached $459 billion last year. It said investments and deposits abroad offset the substantial current account surplus, which is about 13.6 per cent of GDP equivalent to about $150 billion. Gross government debt to GDP declined to 23.8 per cent last year. Last month, S&P Global Ratings upgraded <a href="https://www.thenationalnews.com/business/economy/2023/03/09/saudi-arabias-economy-surges-55-in-q4-on-higher-non-oil-and-oil-activities/">Saudi Arabia’s rating </a>to “A/A-1” from “A-/A-2” and assigned it a stable outlook. Saudi Arabia has one of the highest reserve coverage ratios of country's rated by Fitch. The kingdom's ratio is estimated at 18 months of current external payments. Saudi Arabia, the Arab's world's largest economy, is in the middle of a major economic diversification drive under its Vision 2030 agenda, amid a push to reduce its reliance on oil and tap into other high-growth industries to boost its economy, create more jobs and attract private investment. The kingdom recorded the <a href="https://www.thenationalnews.com/business/economy/2023/03/15/saudi-arabia-was-fastest-growing-g20-economy-in-2022-oecd-says/">highest annual growth rate among the world’s 20 biggest economies in 2022</a>, according to the Organisation for Economic Co-operation and Development. Its economy expanded 8.7 per cent last year on higher oil prices and the strong performance of its non-oil private sector. <a href="https://www.thenationalnews.com/queryly-advanced-search/?query=Saudi%20economy%20">Business </a>activity in <a href="https://www.thenationalnews.com/business/2022/09/20/jadwa-investment-raises-saudi-arabias-growth-forecast-to-87/">Saudi Arabia’s</a><a href="https://www.thenationalnews.com/business/economy/2023/04/04/business-activity-in-saudi-arabia-remained-robust-in-march-on-output-boost/" target="_blank"> non-oil private sector economy</a> remained robust in March with the latest purchasing managers' index remaining in expansionary territory as output and new business accelerated, further supporting employment growth in the kingdom<a href="https://www.thenationalnews.com/business/economy/2023/04/04/business-activity-in-saudi-arabia-remained-robust-in-march-on-output-boost/" target="_blank">.</a> Increased government spending as part of the kingdom's investment strategy under Vision 2030 can spur returns in the form of sustained higher non-oil GDP growth and job creation to meet the expanding national labour force, Fitch said. Saudi Arabia's non-oil economy will continue to gain traction with a growth of 5 per cent in the non-oil private sector this year, supported by higher government capex, investments by the Public Investment Fund including giga projects, robust credit growth, ongoing development of retail and entertainment sectors and employment gains among Saudis and expats, according to Fitch. The kingdom's sovereign wealth fund, the Public Investment Fund is investing heavily to build new projects in the kingdom. It is mandated to pump $40 billion to $50 billion into the local economy to generate jobs and boost the non-oil economic base of the country. Fitch expects a gradual improvement in the kingdom's fiscal structure and a higher spending profile for 2023-2025. The rating agency said the kingdom's fiscal break-even oil price increased last year to $86 a barrel and the non-oil primary deficit to non-oil GDP widened. Government decision-making was "strategic, reflecting a policy balance between supporting Vision 2030 projects and responding to higher inflation on the one hand and remaining fiscally prudent", Fitch said. Fitch estimates fiscal break-even oil price of $76 a barrel in 2025 compared with a previous $70 a barrel projection. It said the non-oil primary balance to non-oil GDP will continue to improve, narrowing to 23 per cent in 2025 from 31 per cent in 2022 and 41 per cent in 2016.