Saudi Arabia may tap international debt markets as early as next month as it seeks funding to help bridge its widening budget deficit, reported Bloomberg.
Fahad Al-Saif, the Head of the Finance Ministry’s Debt Management Office, said, “Most of the debt will be local and around 45 per cent will be raised overseas through Sukuk and conventional bonds.”
“The country will also refinance roughly SAR 44 billion riyals ($11.7 billion) of existing local debt,” said Al-Saif.
The debt office said that they will be ready by January 2020 and it will start assessing the market openings for the issuance.
Additionally, the total debt requirement next year will be as much as SAR 120 billion, the new debt will be up to SAR76 billion and of that new debt, SAR 30 to 35 billion will be international.
The budget, announced this week, marks a shift away from the fiscal stimulus that helped power non-oil economic growth this year to the fastest since 2015. The world’s largest oil exporter is embarking on three years of spending cuts as it looks to private businesses to take the lead.
In the mid-term, Saudi Arabia is considering selling bonds or Sukuk in currencies other than the dollar and the euro, which it’s already issued in, said Al-Saif.
Al-Saif said that the issuance is not part yet of his annual borrowing plan, but it is part of the medium-term debt strategy—which is keeping an assessment and keeping an eye on other markets that may develop.
The debt office is also looking at alternative options including export credit agency financing, said Al-Saif.
“We are now engaged in ECA financing that actually makes sense to be plugged into the portfolio, also infrastructure finance, project finance it depends. There are certain governmental projects that we could finance away from the debt capital markets,” added Al-Saif.