Saudi Arabia Borrows $31.5 Billion to Cover Its Budget Deficit

YemenExtra

M.A.

The Public Debt Management Office of the Saudi Ministry of Finance said in a statement that the country plans to issue debt bonds worth 118 billion riyals ($ 31.5 billion) this year to help fund the budget deficit.

Reuters stated that Saudi Arabia, which issued international bonds worth $ 7.5 billion in January, said the external borrowing strategy “is focused on enabling the Kingdom to borrow most of its financing needs during the first quarter, to reduce exposure to market risk and to allow government and public sector to choose the right time for their foreign issuances.”

The statement comes a few days before the expected release of state oil giant Saudi Aramco to international markets. Saudi Arabia’s government is planning to borrow 118 billion riyals ($ 31.46 billion) to finance the state budget deficit of 131 billion riyals ($ 34.93 billion).

Four years ago, Saudi Arabia, the richest country in the region, suffered from difficult economic conditions because of the huge spending in its aggressive war on Yemen, which led to borrowing, after it was a creditor, to cover its budget deficit. Private and public sector debt to banks in Saudi Arabia last July registered consecutive jumps, doubling by the end of May 2018 to 1.437 trillion riyals ($ 383.2 billion), compared with 1.421 trillion riyals ($ 378.9 billion) a month Same year last year, according to a report by the Saudi Arabian Monetary Agency (SAMA).

The Saudi government, last December, announced the 2019 budget, revealing the continued deficit for the sixth year in a row, the increase in debt, and the use of increased spending to stimulate the slowing economy. According to the new budget indicators, “Saudi Arabia expects the deficit to reach 131 billion riyals (about 35 billion dollars), representing about 4.2% of GDP.” It is also expected to increase public debt to 678 billion riyals (about 180 billion dollars) in 2019, according to the budget for 2019.