'Israel', S. Arabia sovereign-risk scores decline in 2024: Gold. Sachs

By Al Mayadeen English
Source: Bloomberg
2 Jul 2024 19:55
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"Israel," grappling with the financial strain due to its war on Gaza, experienced the most pronounced decline in its sovereign-risk score within the emerging markets category for the first six months of the year.

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Lights are on at the world headquarters of Goldman Sachs in New York on Tuesday, Jan. 24, 2023 (AP)

A recent report published by Goldman Sachs Group Inc. unveiled significant deteriorations in "Israel" and Saudi Arabia's sovereign-risk scores during the first half of 2024, Bloomberg reports.

According to Goldman Sachs economist Farouk Soussa, fiscal challenges have intensified in "Israel" and Saudi Arabia, contributing to their declines in sovereign-risk rankings among emerging markets.

"Israel," grappling with the financial strain due to its war on Gaza, experienced the most pronounced decline in its sovereign-risk score within the emerging markets category for the first six months of the year. The war has placed considerable pressure on "Israel's" public finances, impacting its overall economic outlook.

Meanwhile, Saudi Arabia, despite its ambitious Vision 2030 initiatives aimed at economic diversification, faces substantial fiscal pressures. According to Soussa's report published Monday, the kingdom's extensive spending on Vision 2030 projects, including large-scale infrastructure endeavors, has constrained its ability to consolidate expenditures in the medium term.

This has led to a significant worsening of Saudi Arabia's sovereign risk score, particularly compared to neighboring Gulf states.

Soussa noted that Saudi Arabia is projecting budget deficits annually through at least 2026, in light of ongoing financial challenges exacerbated by its reliance on energy revenues amidst fluctuating oil prices.

Wider ramifications

The repercussions of these fiscal setbacks extend beyond "Israel" and Saudi Arabia, affecting broader economic stability in the MENA region.

Other Arab Gulf countries, including Oman and Bahrain, have also faced downward revisions in their fiscal-balance forecasts due to reduced oil revenues.

Goldman Sachs evaluates sovereign-risk scores based on economic, governance, fiscal, external, and monetary metrics, providing an overall risk assessment on a scale out of five.

According to the latest report, "Israel's" sovereign-risk score decreased by -2.81 compared to the second half of 2023, while Saudi Arabia's saw a decline of -1.21 over the same period.