FinMin secures USD 2.5 bn revolving credit facility: The National Debt Management Center (NDMC) arranged a USD 2.5 bn (SAR 9.4 bn) shariah-compliant revolving credit facility to support the state budget, it said in a statement. The three-year facility was secured with the participation of three unnamed regional and international financial institutions. The story got ink in Reuters.

IN CONTEXT- Finance Minister Mohammed Al Jadaan said in November that the Kingdom will tap local and global debt markets in 2025 to finance the budget gap. This will involve new bond and sukuk issuances for domestic and external markets in both local and foreign denominations, as well as alternative financing, he explained.

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The budget deficit is expected to come in at 2.3% of GDP (SAR 101 bn) this fiscal year and to “continue at similar levels over the medium term” as the government continues to invest heavily in the diversification agenda, according to the budget statement for FY 2025.

The art of deficits: Deficits of SAR 100-140 bn can be beneficial, the minister explained, as long as the returns on public spending exceed the cost of borrowing. This rationale anchors the government’s attitude towards fiscal expansion in 2025, 2026, and 2027, the minister explained. At the same time the government is mindful that fiscal expansion is only sustainable if debt is accessible at reasonable cost. Moreover, deficits should not overload the domestic economy and cause inflation. “This balance is very important,” Al Jadaan said.

ICYMI- The Finance Ministry raised SAR 11.6 bn from fixed-income investors in its December sukuk issuance, up from SAR 3.4 bn in November.

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