Font Size
Share this article

Print Friendly Version
12 December 2019

Saudi Arabia may tap debt market in January 2020 to cover deficit

Saudi Arabia expects its budget deficit next year to be around SAR 187 billion, with plans to finance that by borrowing and drawing down the Kingdom’s reserves.

Bloomberg/Simon Dawson

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.

RELATED STORIES: Sukuk debt issuance Debt Management Office





CPI Financial was established in Dubai in 1999 to meet the needs of an ever-expanding financial community, offering a comprehensive portfolio of market-leading products and services tailor-made for the banking and financial services sectors.

Subscribe to our News Letter


© 2019 CPI Financial. All rights reserved.

No part of this website may be reproduced or used in any form of advertising without prior permission in writing from the editor.