Saudi expects its financing needs for the current year to reach 48 billion riyals ($12 billion). That’s about two-thirds less than what it borrowed last year.
The kingdom announced this month that it had sold $10 billion worth of bonds in various tranches, taking advantage of an opportunity to use global debt markets amid continued market volatility.
Saudi Arabia’s National Debt Management Center said Wednesday in a statement that Saudi Finance Minister Mohammed Al-Jadaan approved the annual borrowing plan for 2023 as well as the schedule for issuing local Sukuk.
He added that the Kingdom raised about 48 billion riyals for its financing needs in 2023 through proactive financing operations that took place last year.
Read: Saudi records budget surplus of AED 149 bn in first 9 months
Higher oil prices helped Saudi Arabia run its first fiscal surplus since 2013 last year, which is expected to be 2.6 percent of GDP. Expectations of a consecutive surplus this year, albeit slight, are overshadowed by global economic concerns and uncertainty over oil prices.
A few days ago, Saudi Minister of Economy and Planning Faisal Al-Ibrahim announced in a statement from Davos that the Kingdom is in a better position to exceed the expected levels of economic growth for 2023, given that it achieved the fastest growth among the G20 countries in the previous year.
Faisal al-Ibrahim said Saudi recorded a growth of 8.5 percent by the end of 2022, supported by non-oil activities. He predicted that the kingdom will achieve economic growth of 3.1 percent in 2023, compared to World Bank estimates of 3.7 percent.
The National Debt Management Center said the Kingdom will continue its financing activities in Domestic and international markets to repay debt due in 2023 and in the medium term, as well as market ways to seize opportunities under the debt management strategy, despite expectations of a surplus.
Saudi will consider increasing borrowing according to market conditions to ensure “its continued presence in the debt markets and enhance the characteristics of its debt portfolio, taking into account market movements and managing the risk of the government debt portfolio”, he said.
According to the report of the annual borrowing plan for the fiscal year 2023, the Kingdom’s financing needs this year are as follows:
- 108 billion riyals maturing domestic and international debt in 2023.
- This year, the Kingdom may consider issuing debt instruments in currencies other than the dollar, depending on international market conditions.
- The expected financing channels are distributed among the issuance of bonds and sukuk locally and internationally and alternative government financing operations.
- The public debt is targeted to reach 951 billion riyals, representing 24.6 percent of GDP.
Sovereign debt in 2022
The size of the sovereign debt portfolio reached 990 billion riyals in 2022, or 25 percent of GDP, down from 30 percent from the previous year. But it exceeds the center’s estimate released a year ago of 938 billion riyals.
Last year, the majority was raised from about $125 billion borrowed domestically. Borrowing from abroad accounted for about 15 percent, down from almost 40 percent in 2021.
The distribution of debt between domestic and international markets will not change significantly from 2022, the center said.
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