“We expect the operating environment for Saudi banks to weaken over the next 12-18 months,” Olivier Panis, a Moody’s vice president and senior credit officer, said in a report. “With the prospect of lower oil prices for longer and a 14 percent reduction in public spending in 2016, we believe that the credit risks across the system are rising.”

Saudi Arabia’s economy has been closely tied to its oil reserves. Over 70% of government revenue came from oil in 2015, Bloomberg reports. Consequently, as oil prices declined, the country’s net foreign assets dropped by $115 billion last year as the government tried to shore up a $98 billion budget deficit by issuing bonds and drawing on reserves.

Moody’s also projected Saudi Arabia’s real gross domestic product to slow to 1.5% for 2016 and 2% in 2017, compared to 3.4% in 2015.

iShares MSCI Saudi Arabia Capped ETF

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