Standard and Poor’s rating agency has come under fire from the Finance Ministry and top economists and businessmen for downgrading the Kingdom’s credit rating.

The decision is not backed by facts, the ministry said.

“The evaluation… came as a hasty reaction, which is unjustified and not backed by reality,” it said in a statement, cited by the SPA news agency. “The agency depended on temporary and unsustainable factors,” it said.

Sami A. Al-Nwaisir, chairman of Al-Sami Holding Group, told Arab News that the ministry did the right thing by brushing aside the report.

John Sfakianakis, Middle East director at Ashmore Group, stressed that the Saudi economy is still on solid grounds even if oil revenues are on the decline.

“The rating decision seems motivated more by the oil price, principally, and their bearish view of oil through 2018, than the reality on the ground,” he said. Basil Al-Ghalayini, CEO of BMG Financial Group, commented: “After their misleading performance in the subprime crisis, I do question the credibility of these rating agencies.”

S&P late on Friday lowered the long-term credit rating for Saudi Arabia one notch to A+ after its deficit rose sharply because of low oil prices.

The ratings agency maintained its negative outlook on Saudi Arabia, saying that the decision reflected the challenges of reversing the “marked deterioration” in the Saudi fiscal balance.

S&P said it could further lower the rating within the next two years if Riyadh fails to achieve a “sizable and sustained reduction in the general government deficit.”

The Finance Ministry cast doubt on the decision, saying S&P lowered the country’s ratings twice within one year from AA- with a positive outlook to A+ with a negative outlook because of the oil price fall.

It also said the decision did not take into account the sound fiscal position of Saudi Arabia, which is backed by assets of more than 100 percent of gross domestic product besides large foreign currency reserves.

In his remarks to Arab News, Al-Ghalayini said that S&P should have done its homework before coming up with these premature conclusions.

“The Saudi economy, in spite of oil prices fluctuations and budget deficit, its fundamentals are still strong with the lowest sovereign debt among the G-20,” he said. “Furthermore, as a positive outlook, the government will spend over $615 billion during the 10th Five-Year plan by 2020,” said Al-Ghalayini.

Commenting further, Sfakianakis told Arab News: “If you take a look at many economies (both developed and emerging), growth is anemic combined by high debt which is the opposite in the case of Saudi Arabia.”

He added: “The economy is still growing, expected reserves to GDP in 2015 should be above 95 percent with very low government debt. Not sure if a lot of developed economies can boast such a record.”

Sfakianakis said: “Undoubtedly rating agencies views impact markets and perceptions even if their track record especially prior to the 2008 financial crisis have been investigated and criticized by US and EU regulatory authorities.”

Speaking to Arab News, Sami A. Al-Nwaisir also suggested that such reports should be released by the S&P with the permission of the Ministry of Finance.

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