International rating agency Standard & Poor's (S&P) has raised the long-term foreign currency rating of Saudi Arabia to A+ from A, putting it on a par with Qatar as the highest-rated sovereign in the region. Bahrain's ratings have also been upgraded.

S&P attributed the rise in Riyadh's rating to improvements in the macroeconomic climate, including the substantial budget surplus recorded in 2005 - and its deployment towards retiring government debt - and accession to the WTO late last year. 'Sharp losses in stock market value in 2006 reflect a healthy adjustment to more sustainable levels and have not, to date, affected the banking sector or the real economy,' S&P said.

Manama's long and short-term foreign currency ratings have been raised to A from A- and to A1 from A2.

'The upgrade is supported by the government's continued structural reforms and prudent financial policies, in particular accelerated privatisation and improved fiscal transparency,' said S&P credit analyst Luc Marchand.